Q: My elderly uncle lives on Social Security and has very little income. He hasn’t prepared a federal tax return for several years, but recently a tax preparer told him he needs to file. Is that true?
A: The Internal Revenue Service (IRS) income tax filing requirements are based on age and filing status. Depending on your uncle’s age and income level, he may not be required to file a return. Generally, for those age 65 and over, the 2012 income thresholds for filing were $11,200 (single), $13,950 (head of household), $16,850 (qualifying widower with dependent child) and $21,800 (joint - both spouses 65+) Your uncle should be on guard against tax scams promoted by individuals trying to persuade people to file false returns.
Q: What should my uncle know to guard against such a scam?
A: The IRS has noted recurring regional incidents of tax-return-related scams involving unsuspecting seniors and others who normally do not have a filing requirement. The scammers try to convince taxpayers such as your uncle to file a return with the IRS for money to which they are not entitled.
Scammers are currently posing as tax return preparers, targeting the elderly and others receiving Social Security benefits. The scammers promise large tax refunds and lure unsuspecting victims into paying for the preparation and filing of fraudulent tax returns claiming false withholding, credits, refunds or rebates. If your uncle falls victim to this scam, he will not only be out the money paid to have the false return prepared by the scammer, but he’ll also have compromised his personal and financial information, opening the door to ID theft.
Q: How has this scam been working?
A: Flyers and advertisements for free money from the IRS have been circulated at community organizations including churches and organizations that assist seniors, exploiting their good intentions and credibility. The flyers suggest that taxpayers can file a return and get a refund with little or no documentation. Once their returns have been filed, scam victims discover either that they do not qualify for a refund or that the refund barely exceeds what they paid the scam promoter.
Such fraudulent schemes are often spread by word of mouth among unsuspecting and well-intentioned people who tell their friends and relatives.
Q: How can my uncle and others avoid such scams?
A: Taxpayers should be very careful when choosing a return preparer. It is important to remember that even if someone else prepares your return, you are ultimately responsible for all the information on your tax return.
If you are approached by someone you suspect may be a scam promoter, you should contact the local IRS Taxpayer Assistance Center. Also, if you have questions about tax credits or refunds, you should visit the IRS website at www.IRS.gov or call the IRS toll-free number at 1-800-829-1040.
The information for this “Law You Can Use” column was provided by the IRS. It was prepared by the Ohio State Bar Association.