Tax season is prime time for mistakes, misinformation, and scams. That’s why the IRS releases its Dirty Dozen list each year, highlighting the most common mistakes and scams that trip up taxpayers. These are the key issues both taxpayers and tax professionals should be paying attention to as we head into the 2025 tax season. If anything about a tax situation or strategy does not feel right, remember to pause and talk with your tax professional before taking action. If they don’t have an immediate answer, give them time to research so your return is handled correctly, and you avoid costly mistakes.
Email, Phone, and Text Scams
More taxpayers are getting emails, phone calls, and text messages about their tax accounts or solutions to their tax problems. Never click on any of these links, never call these numbers back, and never give out any personal information. If you believe you have a real IRS or State tax authority problem, contact your accountant and get their thoughts. Remember, the IRS or State tax authorities will NEVER call, text, or email.
Bad Social Media Advice
Influencers or other accounts on social media are giving more “tax advice” and “tax tips and tricks” lately, especially around this time of year. Some of these may be correct, but others are wrong or apply only in certain situations. The easiest way to avoid accidentally filing a fraudulent tax return when trying to use these tips and tricks is to consult a CPA or other tax professional to have them file your tax return.
IRS Individual Online Account Help from Scammers
Taxpayers can take advantage of creating an online account with the IRS. This can help resolve notices, pay taxes, and stay up to date on all the information about their personal tax situation. With this online account, though, comes the potential for scammers who try to get personal information by “helping” to create your account. By answering this call or signing up for help, scammers would have full access to your IRS account and could file tax returns on your behalf, taking all refunds along with personal information. If you want to create an account and need help doing this, schedule a face-to-face meeting with your accountant to get help setting this up.
Fake Charities
These fake charities pop up most often when a crisis or natural disaster occurs to take advantage of people’s generosity. They not only take money through donations, but they are also often set up to access donors’ personal information for identity theft. Taxpayers cannot claim donations made to fake charities, GoFundMe pages, or other organizations that are not certified nonprofit organizations. A good rule of thumb is that if you do not receive a certified receipt for your online donation, it is probably not a legitimate charity.
False Fuel Tax Credit Claims
In recent years, more people have tried to claim fuel tax credits for personal fuel purchases. If you heard about this from a friend, this does not mean you qualify for this credit. Please consult your accountant to see if you’re eligible. There are many stipulations, and driving to work every day does NOT qualify you for this credit.
Credits for Sick Leave and Family Leave
This specialized credit applied to self-employed taxpayers in 2020 and 2021, but the IRS is seeing more employees try to claim it. Again, this is not a credit most people qualify for, so please consult your accountant before trying to claim it.
Bogus Self-Employment Tax Credit
Social media has been circulating a nonexistent tax credit for self-employed individuals. This fake credit claims that self-employed individuals who worked during the COVID-19 pandemic can get up to $32,000 in tax credits, similar to the Employee Retention Credit, covered in the 2024 list. If you hear about this credit, ignore it, as it is not real.
Improper Household Employment Taxes
Taxpayers have been creating fake household employees to then claim sick and family leave credits for these fake employees. With these new government programs, there has been an increase in fraud and claims for credits that do not exist.
The Overstated Withholding Scam
One of the more popular schemes in recent years involves creating a W-2 or other income form, showing large withholding amounts, and filing a tax return electronically to claim a large refund. The money is then moved before the IRS can do anything. If the W-2 or other income form cannot be verified by the IRS, the return and refund will be held for further processing and review.
Misleading Offers in Compromise
Offers in Compromise (OIC) is a legitimate tool to help taxpayers settle their tax debts when they are unable to pay in full. However, new OIC “mills” have appeared that promote these offers in misleading ways to people who do not qualify, often costing them thousands of dollars in fees. If you are in a situation where you are unable to pay your tax debts in full, it’s best to contact a tax lawyer instead of falling for a too good to be true solution.
Ghost Tax Return Preparers
Be wary of shady tax professionals. One of the biggest warning signs is when your bill is directly based on the size of your refund, such as charging a percentage of the total refund. Always turn to a trusted tax professional or someone else you trust to help. Take a look at your 1040, and if the preparer did not include their name on the return next to yours, ask why.
New Client Scams and Spear Phishing
This “new client scam” is a method cybercriminals use to compromise a tax professional’s computer systems and access client information. This is primarily a warning for professionals in the tax field. While we work hard to warn clients about potential scams, tax professionals also need to remain cautious of ever-evolving cybersecurity threats.
To read more, direct from the IRS, click here.
