Year-End Tax Scam And Tax Prep Alerts
The 7th National Tax Security Awareness Week kicked off on November 28th during which the IRS released information urging everyone to be aware of holiday scams and to protect their personal information. A couple of the most popular and productive scams were mentioned.
Ranking as the most popular holiday scan is one in which scammers ask taxpayers to pay fake tax bills using gift cards. It’s not just taxes they use as ploys either. The scammers also frequently use a compromised email account to request gift card purchases for family and friends.
Another common scam this time of year is one in which scammers use fake charities to make extra money during the holiday season. The IRS released this warning on Giving Tuesday. The major tip for recognizing fake charities: Pressure. Scammers use pressure and suggest unorthodox ways for the generous victims to make donations, which often include gift cards. The scammers also request (sometimes they insist on) specific amounts, typically far more than is usually requested by legitimate charitable organizations.
Alert For The Upcoming Tax Filing Season
Now, let me turn your attention to the upcoming tax filing system. Many taxpayers may be in for a bit of a surprise. With the popularity of Venmo, PayPal, Amazon and Square payment platforms used to buy and sell products and services, many times as side gigs, the IRS finally decided to step in to get a piece of the action.
So, the question is: Did you get paid more than $600 in 2022 for goods or services through one of those third-party payment networks I just mentioned? If so, then, due to a changed tax reporting rule, you will most likely receive an IRS Form 1099-K from your payment network. In prior years, there was a $20,000 threshold, and/or more than 200 business transactions in a year that triggered the 1099-K form. Now, because of changes made under the American Rescue Plan Act, anyone with transactions that exceed the much lower $600 threshold amount (with no minimum number of transactions) in a year will likely receive a Form 1099-K from their third-party payment network. So, for example, under the changed rule, a single transaction for goods and services, that exceeds $600, could trigger the 1099-K.
Even if you’ve never received a 1099-K form, the IRS has always required taxpayers to report all taxable income. It’s going to be harder to ignore this fact under the new rulings. The IRS is going to be asking more questions and flagging those tax returns that fail to report earnings that triggered a 1099-K.
Stay Alert And Be Prepared This Holiday Season
The holidays season is one in which most people are light-hearted and full of good cheer. That’s just the way scammers like it. They like to catch people off-guard. So, please keep your holiday spirit and just be more aware of unsolicited emails, phone calls and text messages from unfamiliar charities and bogus tax bills. The IRS does not call taxpayers, nor do they text or send emails. And, if you have done business through third-party payment platforms this year, be on the lookout for your 1099-k form and be prepared to report those earnings that are $600 and more.
May your holiday season be happy, healthy, and free of any burdensome tax worries. If you do have tax concerns, give us a call and let us see how we can relive your worries.