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Tax time pitfalls

Tax filing season can present pitfalls for consumers -- from scam artists out to steal your identity to refund anticipation loans that can rip you off. Here's some advice to help your tax time go more smoothly:

TAX-TIME SCAMS

The IRS is warning people about some common scams that are expected to continue through the end of tax filing season and beyond:

-- Phony refund e-mails. The scam artists send an e-mail that looks like it's from the real IRS that says you are eligible for an additional tax refund of a specific amount. The e-mail includes a link where you are supposed to click and go to an electronic refund claim form. Don't fall for it. They’re trying to get your personal and financial information.

-- Tax rebate scams. We're all waiting for our "rebate" from the federal government as part of the economic stimulus program. In one new scam, the con artist calls and says they are an IRS representative. The caller says you can get a sizable rebate for filing your taxes early. Then they ask for your bank account information, supposedly to handle the direct deposit of the rebate check.

-- Fake audit announcement. This is a scary one. You get an e-mail addressing you by name and alerting you to an audit by the IRS. The e-mail provides links to a fake Web site where you are asked to complete detailed forms with your personal and financial information.

What you can do:

-- Remember, the IRS NEVER contacts consumers through e-mail to let them know about rebates and audits.

-- Your tax refund - if you are due one - is based on the tax return you file. You do not need to fill out any additional online forms to receive your refund.

-- Never give out your personal or financial information over the phone. Don't click on links provided in e-mails, either. If you want to get to the IRS Web site, type in www.irs.gov into your browser.

-- If you are wondering what your refund is, go to irs.gov and check out their "Where's My Refund" interactive application.

-- Forward any suspicious e-mails to phishing@irs.gov

REFUND ANTICIPATION LOANS -- ARE THEY WORTH IT?

It's tempting to get your money quickly, but "refund anticipation loans" offered by some tax preparation businesses are NOT a good deal for consumers. In some cases, the interest rate can be as high as 40 to 60 percent!

Here are some tips about refund anticipation loans and how to choose a tax professional, courtesy of the local Better Business Bureau:

-- Consider waiting. The IRS has a "free file" program for people with an adjusted gross income of $54,000 or less - they can file online and get their refund direct-deposited to their bank in as little as 10 days. If you can wait that long, you can save A LOT of money. Check out www.irs.gov for your options.

-- Remember, a "refund anticipation loan" is just that - a loan, not a refund. That means if your actual refund from the IRS turns out to be less than the paperwork showed, you will still have to repay the bank.

-- Look at the fees and the interest rate. Check for any hidden charges and consider whether the percentage rate is worth it.

-- When hiring a tax preparer, avoid guarantees. If a tax preparer guarantees a certain amount of refund money or bases its fee on a percentage amount of your refund, be very, very careful.

-- Avoid temporary preparers. Will your tax preparer be around later, if there's a problem with your tax return? Some of these people are seasonal and disappear after April 15.

-- Check them out. Always check the tax preparer's record with the Better Business Bureau and other consumer agencies before making any hiring decisions. The BBB reports that nearly one-third of its complaints against tax preparation companies alleged that the services messed up the consumer's return - often requiring the consumer to pay fines or extra fees to straighten things out. Remember, if there's a mistake, YOU are the one responsible to the IRS.



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