Common tax scams and how to protect yourself

Tax scams happen year-round, but they tend to spike during tax season (January 27 to April 15 this year). Of the tax scams reported to the Better Business Bureau’s Scam Tracker last year, 61% were uncovered during the first four months of the year. 

And younger Americans are more likely to lose money to fraudsters. 

About one in three Americans 20 to 29 reported losing money to fraud last year, according to the Federal Trade Commission’s 2019 Consumer Sentinel Network data. Meanwhile, only about 13% of those 70 to 79 reported fraud losses. Since 2013, tax scams have cost victims more than $23 million, according to the IRS. 

The most commonly reported type of fraud is identity theft. Last year, the FTC received over 650,000 individual reports of identity theft. Many times, this is the type of fraud that follows tax scams. 

Here’s a look at four of the most common types of scams you’re likely to see related to taxes and how to protect yourself from falling victim. 

While the majority of tax professionals are honest and provide legitimate services, there are some bad apples. The scams that come from these individuals can take several paths. Sometimes an unscrupulous preparer will put together returns using false information in order to boost a refund, while others will attempt to steal personal information included within tax documents.