COLLEGE STATION – With tax season here, individuals should take time to organize information for their return, plus be alert to income tax-related scams, said a Texas A&M AgriLife Extension Service expert.
“The IRS is requesting that people file their tax returns as soon as possible to avoid a logjam on the April 15 deadline,” said Nancy Granovsky, AgriLife Extension family economics specialist, College Station. “But another good reason for filing early is to possibly help avoid identity theft from those who might want to file a tax return in your name using your personal information.”
Granovsky said knowing what documentation is needed and organizing it properly is vital to ensuring an income tax return is ready to file.
“Put together all tax-related forms, documents and records and organize any needed income statements, receipts and other documentation that your tax return requires,” she said.
She added having this information at hand can also help in determining whether it’s best to itemize or take the standard deductions allowed by the IRS.
“Now is a good time to be particularly alert to any tax-related documents that might come to you in the mail — or by email in the event you have requested your W-2 or other income tax-related documents come to you that way,” she said.
“If you have investments or income other than from an employer, you’ll likely be getting a 1099, so be on the lookout for that as well. Your W-2 should have reached you by now. However, I’ve already heard that many people have received notice that there will be delayed delivery of 1099-DIV’s.”
Form 1099-DIV reports ordinary dividends, total capital gains, qualified dividends, non-taxable distributions and other types of income from investments, Granovsky said.
“It’s important people have all the necessary forms before attempting to have their tax return processed and to include all the pertinent information the IRS requests,” she said. “You also need to be careful about who’s preparing your taxes. There are some storefront preparers who say they can prepare your taxes if you just provide them with a monthly pay stub. But it’s vital to have the complete, proper W-2 form for the entire year, plus any other applicable forms, to ensure the return can be prepared accurately.”
Having a 1095 form related to health care coverage will be another element in the preparation of tax returns for many individuals, Granovsky said.
People enrolled in coverage through the health insurance marketplace should receive Form 1095-A by mid-February, which contains important information needed to accurately file a tax return. Those expecting to receive a 1095-A should wait until the form is in hand before filing a return. The form can also be obtained online at www.healthcare.gov.
Taxpayers expecting to receive a Form 1095-B or 1095-C do not have to wait for these forms in order to file a tax return, nor do they have to send these forms to the IRS. They can rely on other information to determine the extent of their health coverage during the year.
People should also be mindful about filing an extension on their income tax, Granovsky said.
“While there are many legitimate and necessary reasons for filing for an extension, people need to be aware that someone else might file a return using their social security number before the individual requesting the extension has had an opportunity to file their own return,” she said.
“This constitutes identity theft when a thief files a false return using your name and number, fictitious W-2 information, and receives a refund based on this fictitious information. Then when the taxpayer tries to file their own honest return, their return is rejected because the SSN has already been used by another person.”
Granovsky said this type of identity theft is a growing problem and the IRS urges vigilance and close monitoring,
“If someone is concerned about making an error or has not found all of their documentation for their legitimate itemized deductions before the normal April filing deadline, filing on time and later submitting an amended return might be a safer bet than asking for an extension,” she said.
“There are many cases of having an extension request approved but then, by the time the taxpayer submits the actual return, which is not due until Oct.15, the return is rejected by the IRS because the SSN had already been used on a fraudulent return.”
Granovsky said the IRS also emphasizes that IRS e-file is the best way to file an accurate tax return, plus is a convenient, safe and secure way to do it.
“You also typically get your refund faster, plus e-file can help walk you through the provisions related to the Affordable Care Act. They also recommend having your return direct deposited as another safety measure.”
Granovsky said while many people have been made aware of some tax scams, there are other scams or frauds being perpetrated, so people need to be continually aware and vigilant.
“Many of us have heard about people posing as IRS investigators or law enforcement calling homes or businesses and threatening people with arrest if they don’t immediately ‘pay up’ on their taxes,” Granovsky said. “A few of the other scams the IRS has identified include the tax preparer phishing scam and the email phishing scam, which ask people to update their personal information.”
She said while the IRS has issued periodic warnings about these scams and the news media has covered some of them, scammers are constantly trying to get personal or financial information in order to steal someone’s identity and assets.
“So it’s very important people continue to be aware of these scams and know how to best protect against getting scammed,” Granovsky said.
She said an explanation of these scams and information on how to respond to and report them can be found at https://www.irs.gov/uac/Tax-Scams-Consumer-Alerts.