Identity Theft, Tax Fraud and ID Protection PINs
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By: Steven Brewer, CPA
We hear every day that another cyberattack has exposed thousands of pieces of personal data. Just recently, it has come to light that millions of us have had our personal data, including social security numbers, exposed by a cyberattack on National Public Data.
Identity theft takes many different forms. One of the most troubling is when someone uses your personal data to file a tax return. They will file false information using your name and social security number to obtain credits and refunds that are sent to them. There is a way for you to prevent this from happening.
The Internal Revenue Service instituted a program for Identity Protection PINs. These are a series of six-digit numbers assigned to you each year. Each year, you will receive a new PIN so you must give this to your preparer to be able to file your return. You must include this PIN when you e-file your tax return to identify that YOU are filing the return. If a return is filed without the PIN, then the return is rejected.
When you set up the PIN program with the IRS, you also will set up an online account with the IRS. That account will allow you to see your records with the IRS, what has been filed, what the results are, etc. This is very helpful if you ever have a question about what the IRS has. It also will help your tax preparer. When you have an online account, the tax preparer can send you a Power of Attorney form to the account for you to e-sign. The Power of Attorney form is needed for the tax preparer to receive information from the IRS on you if there is ever a problem that you ask the preparer to help you with.
To obtain information on the Identity Theft PIN, go wot https://www.irs.gov/identity-theft-fraud-scams/get-an-identity-protection-pin. Only you can obtain the PIN. No preparer or other third party can do this so if someone is telling you they can get one for “turn and run the other direction”.
You do have the option to opt out of the program unless you are a confirmed victim of identity theft. If so, you cannot opt out.
So, for your piece of mind and to stop the “bad guys” from getting into your taxes, get your PIN today.
By: Steven Brewer, CPA We hear every day that another cyberattack has exposed thousands of pieces of personal data. Just recently, it has come to light that millions of us have had our personal data, including social security numbers, exposed by a cyberattack on National Public Data. Identity theft takes many different forms. One of the most troubling is when someone uses your personal data to file a tax return. They will file false information using your name and social security number to obtain credits and refunds that are sent to them. There is a way for you to prevent this from happening. The Internal Revenue Service instituted a program for Identity Protection PINs. These are a series of six-digit numbers assigned to you each year. Each year, you will receive a new PIN so you must give this to your preparer to be able to file your return. You must include this PIN when you e-file your tax return to identify that YOU are filing the return. If a return is filed without the PIN, then the return is rejected. When you set up the PIN program with the IRS, you also will set up an online account with the IRS. That account will allow you to see your records with the IRS, what has been filed, what the results are, etc. This is very helpful if you ever have a question about what the IRS has. It also will help your tax preparer. When you have an online account, the tax preparer can send you a Power of Attorney form to the account for you to e-sign. The Power of Attorney form is needed for the tax preparer to receive information from the IRS on you if there is ever a problem that you ask the preparer to help you with. To obtain information on the Identity Theft PIN, go wot https://www.irs.gov/identity-theft-fraud-scams/get-an-identity-protection-pin. Only you can obtain the PIN. No preparer or other third party can do this so if someone is telling you they can get one for “turn and run the other direction”. You do have the option to opt out of the program unless you are a confirmed victim of identity theft. If so, you cannot opt out. So, for your piece of mind and to stop the “bad guys” from getting into your taxes, get your PIN today.
By Steven Brewer, CPA Another tax scam has hit the market and social media. It is called the “Self-Employment Tax Credit”. The scam is marketed to self employed individuals and gig economy workers. The scam claims you can get up to $32,000 in a refundable credit for working during the COVID-19 pandemic period. Social media seems to be the biggest media used to reach out to the unsuspecting people. This is causing them to file false amended returns. The promoters are charging hundreds, if not thousands, of dollars to prepare and help file these false returns. When the IRS denies the return and the taxpayer goes back to find the promoter who filed the return, they will be gone. The closest tax credits that are available are the Credits for Sick and Family Leave for 2020 and 2021. What is happening is that taxpayers are claiming this credit when they are employees of a company and not self-employed person. These credits are only for self employed individuals who were not allowed to work (including caring for an individual subject to quarantine or isolation order) along with other technical requirements. The marketing being used by the promoters is very similar to that seen for promotion of the Employee Retention Credit scams. As always, if you have any questions about a tax credit or other tax items, seek out the expertise of a professional tax preparer. Also, there are other tax scams showing up for Fuel Tax Credit and household employee taxes. If you suspect something is a scam, it probably is.
On July 10, 2023, I walked out of my old office for the last time. Upon my departure, I gave up a lot of my identity. I spent eight years with the firm and was one of four owners. I lost some relationships. No, I didn’t lose friends or leave on bad terms, but I walked away from the thing that connected us and the daily social interaction it facilitated. I said goodbye to the daily structure. And, oh yeah, I gave up a nice paycheck. No matter how much money you have in the bank, how well prepared you may be, that’s scary. And while I wasn’t retiring, almost every retiree faces these same challenges. Below are a few strategies to help you sleep better at night in your first few years of retirement. 1. Retire “to” not “from.” I drove from my old office to my new one. I didn’t stop at home. I didn’t stop for coffee. I don’t even think I listened to the radio. And I wouldn’t advise this. I encourage my clients to take some time to breathe. Do the home projects you’ve been putting off for 30 years. Spend time with your grandkids. Take that trip. When I arrived at my new office, I had my new identity, much the same as my old. Professionally, I am a financial planner, an owner and an entrepreneur. The gig economy has made it much easier to work when you want, how you want, in the industry you are passionate about. The most important thing about retiring “to” something is that you know who you are. Remember: “Retired” says only what you don’t do. Make sure you know what you do do. Now, I know you’re asking, “How does this make things less scary?” Two reasons. First, being busy inherently reduces stress. Second, many of the things that people retire to pay something. Probably not what you’re used to, but they take stress off your portfolio, and your shoulders, between retirement and Social Security. 2. Cash is king. Not in an investment sense and not forever. I often encourage retirees to have a year’s worth of expected expenses in the bank, including any one-time, big-ticket items. That’s much more than the three to six months you’d read about in a personal finance textbook. It’s really uncomfortable to watch your checking account deplete without the bi-weekly refills. One strategy that may help is to hold that year’s worth of expenses in a savings or money market account that deposits the exact amount of your old paycheck into your checking account every two weeks. 3. Have a financial plan. Think of your financial plan as your gas gauge. It will tell you how far you can go without running out. Ideally, you have many more miles than you plan to drive. A proper financial plan will also address cash flow, risk management, investments and estate and tax planning. However, the core thing you want your financial plan to tell you is this: “You’re going to be OK.” That will certainly help you sleep at night. If you want reaffirmation of your plan, you can check your numbers for free here. 4. Have an appropriate asset allocation. Your investments are the actual gas in the tank. Cerulli Associates and other financial firms have long documented the difference between “investment” returns and “investor” returns. The latter typically are much lower than the former because we are human beings. We buy at highs and sell at lows. Vanguard’s Advisor’s Alpha study highlighted behavioral coaching as the most valuable service financial advisers provide. Much of this panic selling is due to having a portfolio that made much more sense in your 30s than it does in your 60s. Weekly, I come across Baby Boomers who have more risk in their portfolio than I do. I am 37. A subsequent article will serve as a guide to find your appropriate asset allocation. In the meantime, you can use this free tool to gauge how much risk you’re comfortable with. 5. Have an income plan. Throughout your working career, if you’re an employee, you have an income plan. It’s your paycheck, and it’s probably as steady as your job. In the last 15 years, I can count on my two hands the number of pre-retirees who have an income plan for the next chapter. The financial plan tells you how much you can spend every year. The income plan tells you where it’s going to come from every month. When I started my own firm, I knew that I had two years of runway, literally making no money, before I would run out. My financial plan told me that. Where I would draw excess money for expenses was part of my income plan. Fortunately, things ramped up quickly, and there were only a few months where this was necessary, but the fact that I had a plan meant I could sleep soundly. Credit: Kiplinger.com
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By: Steven Brewer, CPA We hear every day that another cyberattack has exposed thousands of pieces of personal data. Just recently, it has come to light that millions of us have had our personal data, including social security numbers, exposed by a cyberattack on National Public Data. Identity theft takes many different forms. One of the most troubling is when someone uses your personal data to file a tax return. They will file false information using your name and social security number to obtain credits and refunds that are sent to them. There is a way for you to prevent this from happening. The Internal Revenue Service instituted a program for Identity Protection PINs. These are a series of six-digit numbers assigned to you each year. Each year, you will receive a new PIN so you must give this to your preparer to be able to file your return. You must include this PIN when you e-file your tax return to identify that YOU are filing the return. If a return is filed without the PIN, then the return is rejected. When you set up the PIN program with the IRS, you also will set up an online account with the IRS. That account will allow you to see your records with the IRS, what has been filed, what the results are, etc. This is very helpful if you ever have a question about what the IRS has. It also will help your tax preparer. When you have an online account, the tax preparer can send you a Power of Attorney form to the account for you to e-sign. The Power of Attorney form is needed for the tax preparer to receive information from the IRS on you if there is ever a problem that you ask the preparer to help you with. To obtain information on the Identity Theft PIN, go wot https://www.irs.gov/identity-theft-fraud-scams/get-an-identity-protection-pin. Only you can obtain the PIN. No preparer or other third party can do this so if someone is telling you they can get one for “turn and run the other direction”. You do have the option to opt out of the program unless you are a confirmed victim of identity theft. If so, you cannot opt out. So, for your piece of mind and to stop the “bad guys” from getting into your taxes, get your PIN today.
By Steven Brewer, CPA Another tax scam has hit the market and social media. It is called the “Self-Employment Tax Credit”. The scam is marketed to self employed individuals and gig economy workers. The scam claims you can get up to $32,000 in a refundable credit for working during the COVID-19 pandemic period. Social media seems to be the biggest media used to reach out to the unsuspecting people. This is causing them to file false amended returns. The promoters are charging hundreds, if not thousands, of dollars to prepare and help file these false returns. When the IRS denies the return and the taxpayer goes back to find the promoter who filed the return, they will be gone. The closest tax credits that are available are the Credits for Sick and Family Leave for 2020 and 2021. What is happening is that taxpayers are claiming this credit when they are employees of a company and not self-employed person. These credits are only for self employed individuals who were not allowed to work (including caring for an individual subject to quarantine or isolation order) along with other technical requirements. The marketing being used by the promoters is very similar to that seen for promotion of the Employee Retention Credit scams. As always, if you have any questions about a tax credit or other tax items, seek out the expertise of a professional tax preparer. Also, there are other tax scams showing up for Fuel Tax Credit and household employee taxes. If you suspect something is a scam, it probably is.