2008 Woodie Awards
IRS warns of 'dirty dozen' tax scams
By: Shawn Dooley
Issue date: 2/23/06 Section: News
Many students are filing their taxes for the first time and there are so many options and ways students can file taxes. Where do students go and what do they watch out for?
Each year the Internal Revenue Service releases a "Dirty Dozen" of the top 12 tax scams. Each year some of the same scams appear, but this year there are a few new scams on the rise and many old scams have faded. The IRS wants people to watch out for schemes that promise to reduce or eliminate taxes. Two newer schemes are "zero wages" and "Form 843 tax abatement" where filers claim their tax bills have been wrongly increased. Since these claims have made the annual list, it means that activity using these scams has increased.
Another scam to watch for is "phishing," a favorite ploy by identity thieves. Thieves pose as the IRS on the Internet, with a goal of obtaining private information which can be used to steal the financial records and account information of unsuspecting people.
Mark W. Everson, IRS Commissioner, urges taxpayers to not get caught up in these schemes to lower or eliminate taxes because they can lead to a big mess.
Nellie Mae, a Federal Family Education Loan Program and privately funded loan program, says you must file a federal tax return if you are:
• A dependent student, claimed on your parent's tax return, and in 2005 you had unearned income (interest, dividends) over $800 or earned income (job, tips, paid internships) over $5,000.
• An independent student, not claimed on anyone else's tax return, and for 2005:
• Your tax filing status is single and your income was over $8,200
• Your tax filing status is head of household and your income was over $10,500
• If your parents are claiming you on their tax return, they can claim any education tax benefits, which include tuition costs, excluding scholarships and grants that are not taxable.
Nellie Mae reports that 75 percent of people who file a federal tax return get a refund. Even when not required to file, filing may be worth the refund that is owed.
Each year the Internal Revenue Service releases a "Dirty Dozen" of the top 12 tax scams. Each year some of the same scams appear, but this year there are a few new scams on the rise and many old scams have faded. The IRS wants people to watch out for schemes that promise to reduce or eliminate taxes. Two newer schemes are "zero wages" and "Form 843 tax abatement" where filers claim their tax bills have been wrongly increased. Since these claims have made the annual list, it means that activity using these scams has increased.
Another scam to watch for is "phishing," a favorite ploy by identity thieves. Thieves pose as the IRS on the Internet, with a goal of obtaining private information which can be used to steal the financial records and account information of unsuspecting people.
Mark W. Everson, IRS Commissioner, urges taxpayers to not get caught up in these schemes to lower or eliminate taxes because they can lead to a big mess.
Nellie Mae, a Federal Family Education Loan Program and privately funded loan program, says you must file a federal tax return if you are:
• A dependent student, claimed on your parent's tax return, and in 2005 you had unearned income (interest, dividends) over $800 or earned income (job, tips, paid internships) over $5,000.
• An independent student, not claimed on anyone else's tax return, and for 2005:
• Your tax filing status is single and your income was over $8,200
• Your tax filing status is head of household and your income was over $10,500
• If your parents are claiming you on their tax return, they can claim any education tax benefits, which include tuition costs, excluding scholarships and grants that are not taxable.
Nellie Mae reports that 75 percent of people who file a federal tax return get a refund. Even when not required to file, filing may be worth the refund that is owed.