Identity theft is the fastest growing crime in America, with the number of identity theft incidents nearing 10 million a year. And in most cases, you won't know you are a victim of tax-related identity theft until you file your tax return. How And When To Report Tax-Related Identity Theft There are usually two ways a taxpayer becomes aware he or she is a victim of tax-related identity theft:
Filing the ID Theft Affidavit notifies the IRS that someone else has already filed a return using your SSN or you have been informed of a suspicious return filed or you know your information has been compromised due to a lost or stolen wallet or for some other reason. This notification allows the IRS to take steps to secure your account. Most cases are resolved within 120 days but can take up to 180 days. Certain tax-related identity theft victims will be placed into the Identity Protection PIN program to add an extra layer of identity protection. Taxpayers who are victims of identity theft will receive a letter (CP01A) with an Identity Protection Personal Identification Number (IP PIN) prior to the start of next filing season to help protect their tax returns going forward. And if your refund is delayed due to ID theft and it’s causing a financial hardship such as an imminent eviction, utility cutoff, inability to pay for medical needs, tuition, etc., you should contact the Taxpayer Advocate Service.. Additional Steps If you are a victim of identity theft, the Federal Trade Commission (FTC) recommends these steps:
IRS ID Verification Service A pre-screening procedure has been implemented for suspicious tax returns. But since the return could be legitimate, the IRS has provided opportunity to verify identity. When the IRS receives a suspicious return, Letter 5071C will be mailed, asking for verification of identity. The letter provides two options for responding. Either by calling the toll-free number listed on the letter or by visiting idverify.irs.gov within 30 days. Whichever option you use, have available a copy of your prior year tax return and your current year tax return, if you filed one, including supporting documents. If the taxpayer fails to respond to the verification request or responds and answers a question incorrectly the IRS will flag the return as fraudulent and follow the prescribed procedures for resolving identity theft cases. If identity is verified, the taxpayer can then confirm whether or not they filed the return in question. If they did not file the return, the IRS can take steps at that time to assist them. If they did file the return, it will take approximately six to nine weeks to process it and issue a refund. Reduce Risk
And while you can push your tax filing date, and paying, to the limit, you need to act, to make sure your tax bill is as small as possible. There are measures, many of them online or via smartphone apps, that you can put in place, to save you time, and save you money.
And there's an app for that.. Tracking expenses, time and mileage can be a pain, but not having and keeping important documents could lead to substantial penalties if you are audited. Small business owners and individuals with significant expenses, that are determined not to leave money on the table at tax time, can use the app Expensify, which allows recording billable hours, mileage to and from client offices, and expenses. If it’s important for you to track every hour, then this app may help you accomplish that goal. It takes about one minute to enter in time and provide details about how many hours worked, hourly rate, client and project. If items billable are marked, then it automatically creates an invoice to send from your iPhone. The app also allows capturing pictures of receipts, and it provides the ability to record mileage on the go. With IRS mileage rates at 56.5 cents per mile, taking advantage of every mile can help save money at tax time. Don't play the guessing game.. Many taxpayers cut their expected refunds short, or increase their tax bill, because they lack accounting records and receipts. Then, at tax time, taxpayers have to guess at the amount spent for items that qualify as deductions. Playing the guessing game can cost you big bucks. Using a tax checklist or organizer can help. These can be found on the Internet. A checklist serves as a road map of which expenses are deductible throughout the year. Also, having a sound system in place is the key to taking advantage of all available deductions. Your system doesn't have to be fancy, but it should be work for you. Programs such as Mint.com and other software can keep you on the right track. Small-business owners may benefit from sites such as Outright.com, to provide online bookkeeping to help categorize tax-deductible expenses upfront and create a custom reports. In addition to apps, review your bank statements monthly or bimonthly, and highlight expenses that are tax-deductible. And how much do you owe? If you are wondering how much you will owe in taxes, check out IRS.gov’s withholding calculator to help estimate tax liability. With a few clicks, you can determine whether you are on a path to a refund or owing money. If you are likely to owe money, you can complete Form W- 4 to make adjustments to your withholdings. However, if you are self-employed or receive income not subject to enough or any withholding, you may need to pay estimated taxes. |