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How Year-end Business Taxes Work

        Money | Taxes

Year-end Tax Schemes

As with any seemingly hectic tax time, tax schemes are in full swing at the end of the year looking to prey on those who are desperate to alleviate what they will owe in taxes for the year.

The first step in avoiding these schemes is to keep your emotions in check. Remember, there isn't much you can do at this point anyway, so acting out of desperation will only make you more likely to fall into a trap.

Even so, sometimes smart, level-headed people become victims of scams. So the second step would be to educate yourself on common end-of-year tax scams.

According to the IRS the most common scams for 2014 include:

  • Identity Theft: This is when someone uses your personal information to commit tax fraud. The IRS has a special section just for identity protection to keep you safe.
  • Telephone Scams: Telephone calls where people pretending to be from the IRS have become more common. Callers typically tell victims that they either owe money or have a large refund waiting for them. The more pervasive calls threaten with arrest or revoking of the victim's driver's license. If this happens, the IRS suggests that you call the agency directly before taking any other action.
  • Hiding Income Offshore: While there are legal reasons to keep some money abroad, many scams pop up this time of year telling you to move your money offshore in order to alleviate your tax payment. There's another term for this that is very frowned upon by the IRS: tax evasion.
  • Impersonation of Charitable Organization: This is extremely common since many people think giving to charity will ease their tax payments. Always check out the credentials of any charity.
  • False Income, Expenses or Exemptions: People may be encouraged to inflate income, expenses or exemptions for the year in an effort to lessen their tax payments. This is considered a crime and in some cases can result in prosecution.

For more on common tax scams make sure to read the IRS publication, Dirty Dozen Tax Scams for 2014.

Next, we'll talk about some things that might actually help you with your tax liabilities in the New Year.