Tax Refund Scams

By
June Adams
January 31, 2022
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Tax-related fraud and identity theft have continued to grow, with millions of people becoming targets. Scammers need little more than your Social Security number and other general information to file a fraudulent tax return and hijack your tax refund. Taxpayers typically don’t discover the fraud until they attempt to file their own returns, which is why it's essential to file taxes as soon as possible. At the same time, you may want to confirm the appropriate timing with your tax professional. Although 1099s are due by the end of January, custodians may correct 1099s throughout February. If drastic changes happen to a 1099 after you file your taxes, the change can severely impact the amount you owe.

 

Here are some helpful ways to prevent your SSN from being compromised:

  • If you have been a victim of identity theft, complete  IRS form 14039, identity theft affidavit.
  • Respond immediately to any IRS issued notice once you verify the authenticity of the notice. You can do so by calling the IRS directly at 800-908-4490 or setting up your  online account.
  • Get an Identity Protection PIN: a 6-digit number that prevents someone else from filing a tax return using your Social Security number or individual taxpayer identification number. Only you and the IRS know the IP PIN.

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By Trilogy Financial
June 7, 2024

AI is revolutionizing the way scams are conducted, drastically reducing operational costs while simultaneously enhancing the believability of fraudulent calls. In the 12 months since the launch of ChatGPT, AI-aided identity fraud surged nearly 1,800%, and phishing emails surged by nearly 1,300%, with their quality being the best we've ever seen. Additionally, AI-operated news sites, often used to push out misinformation, disinformation, and propaganda, grew from 40 sites to nearly 600.

Things to Know:

  • Content Farms: These platforms pump out low-quality, clickbait articles to earn ad revenue. Initially, humans edited AI-drafted articles for quality, but now, AI can produce vast amounts of content with little to no oversight.
  • Advertising Concerns: Reputable brands might unknowingly advertise on these spammy sites, which can mistakenly lend these articles credibility.
  • Disinformation Risk: Without human checks, AI can spread false information. This ranges from accidental “AI hallucinations” (fabricated facts) to deliberate disinformation, like fake celebrity obituaries designed to increase site traffic.

Tips for Navigating Content Safely:

  • Critical Thinking: Always question the authenticity of online articles.
  • Recognize AI Signs: Be cautious of sites with generic names or an overload of ads. Look out for errors and placeholders (e.g., “[date]”) that suggest AI-generated content.
  • Take Breaks: Regularly step away from the digital avalanche to avoid content fatigue and maintain cybersecurity awareness.
By
Jeff Motske, CFP®
June 7, 2018

Your retirement savings, which is the means to your financial freedom, should be set up in the same way. There is no way to accurately predict what life will be like during the course of your retirement. Based on the climbing US debt, it is safe to assume that tax rates may increase. Unanticipated expenses may arise. Life is never predictable. Therefore, you need your money to be ready to work for you. In my experience, one of the best ways to ensure this is by utilizing three types, or buckets, of savings.

The first bucket is comprised of your traditional retirement investments like a 401(k), 403(b), or 457 plan. These plans are very popular and easily accessible as most employers offer them. Contributions grow tax-deferred and can be automatically deducted from one’s paycheck. However, what was a tax benefit while saving becomes a tax-trap once you retire as those funds will be taxed once they are pulled out. Another thing to consider is what the tax rate will be like at that time. I always ask my clients, “Do you think taxes will have gone up or down by the time you retire?” No one ever says down. Therefore, if all your retirement funds are in this first bucket, you are suddenly at the mercy of the government on how you utilize your retirement money. This is not financial freedom.

However, more buckets mean more options. Let’s consider that you also have retirement savings invested in a second bucket containing tax-free funds. This is typically comprised of Roth IRA’s or Roth 401(k)’s. Although Roth 401(k)’s are not highly promoted or even included in a lot of employer-offered plans, they are a very powerful saving tool. Your contributions grow tax-deferred and are distributed tax-free. With the addition of this second bucket or savings, you suddenly have a little more flexibility on how you access your money.

The final bucket is one that isn’t on most people’s radar. This bucket should be comprised of the investments in your portfolio of stock equities. The gains on these investments are taxed as capital gains. Historically, capital gains tax rates are significantly lower than typical income tax rates. If these investments are sold properly, they can provide another option when trying to manage how your money works for you.

As you can see, multiple buckets of retirement savings seek to provide you with freedom and tax control. If taxes are high, utilize your second bucket. If taxes are lower, feel free to dip into your first bucket. You can work with your financial advisor on what investments belong in which bucket, as well as to dial more or less into these buckets depending on tax rates and what your needs are. This flexibility is key to securing your financial freedom in retirement.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Investing involves risk, including the risk of loss.

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