When it comes to taxes, Social Security, Medicare, and other
facets of your financial life, scammers galore would love to rob you. Learn how
to spot and avoid them.
Selena
Maranjian (TMFSelena) Dec 29, 2019 at 8:03AM
There are few feelings worse than realizing
you've been had -- especially if you've been taken to the cleaners in the
process. It happens to many people, though, because there are gobs of financial scams out there, and plenty of
scammers looking for people to take advantage of.
Here's a look at three common scams.
Tax scams
A common kind of tax scam these days occurs when
a con artist files a tax return for you -- and claims your refund. He or she
will have to have gotten some critical information from you first, such as your
full name, address, and Social Security number. All kinds of financial mayhem
can ensue if you don't guard such information and are not judicious in giving
it out.
How does a scammer get that information from
you? Well, they may just call you and pretend to be with an organization you
trust, such as the IRS, the Social Security Administration (SSA), your bank, or
your credit card company. They may explain that there's some problem and to fix
it, they will need to verify your information. This is called
"phishing," as in fishing for information. Similarly, they may email
you, pretending to be a trusted organization, and get you to click a link in
order to solve a worrisome problem -- perhaps, for example, they will pretend to
be a bank and will suggest that a $900 withdrawal (that you didn't make) will
go through unless you click a link and tell them not to process it. You might
then be asked for personal information. Or perhaps the link will cause some
malware to run on your computer.
Making matters worse, many scammers employ
"spoofing" tricks. They can call you and have their phone number
display as coming from the IRS or the Social Security Administration or a
business or agency you trust. They can also make their fake emails look a lot like
those from known organizations, complete with the companies' logos and
official-sounding language. Try to be skeptical whenever any entity reaches out
to you and wants your personal information -- especially if they're trying to
alarm you.
Back to that tax scam: How might you prevent it,
beyond safeguarding your personal information? The best way is not to
procrastinate about preparing and filing your return. If you get your taxes
done and sent in early, you'll give the scammers much less time in which to try
to steal from you. Also, know that the IRS doesn't call taxpayers asking
for immediate payments to solve problems, and it doesn't email you about your
refund or ask for your personal information via email, either.
A last tax scam to look out for is that of
the "ghost" tax preparer. That's when you pay someone to prepare your
return, but he or she doesn't sign it and instead has you sign it. That makes
it seem as if you prepared it, and you will be on the hook if the unscrupulous
preparer changed some of your numbers, perhaps to qualify you for some tax
breaks. Some ghost preparers will also quietly divert refunds to their own
accounts. If you're paying someone to prepare your return, don't just go with a
stranger at a booth somewhere. Ask around for recommendations or go to a
reputable company.
Social Security scams
Similarly, scammers use many of the techniques
above to try to get at your Social Security benefits. They may call or email
you to alarm you, saying that your Social Security number has been canceled or
suspended, for example. Once they have the information they need, they can set
up an account in your name with the SSA and use their address and bank account
in order to collect your benefits.
One way to prevent this is to set up a my
Social Security account with the SSA before a scammer does. You
don't have to be in or near retirement to do so -- you can do it at any age.
Upon doing so, you'll be able to see the SSA's record of your earnings for all
of your working years, along with estimates of the benefits you'll collect if
you start collecting at different ages.
Remember that like the IRS, the SSA doesn't call
you to get personal information. If you're not sure whether a certain call is
legitimate, try hanging up, looking up its number online, and calling the
agency yourself. (You'll find the Social Security Administration at
800-772-1213 and the IRS at 800-829-1040.) Then you can ask about the status of
your account or if there are any problems. (There probably aren't.)
Medicare scams
Now that you know what to look out for, you can
probably defend yourself well against Medicare scams. In many of those,
scammers will call or email you with alarming news -- such as that your
Medicare will be canceled unless you quickly provide some personal information
to the caller, such as your Medicare number. Understand that Medicare doesn't
call people -- and it doesn't need to be told your Medicare number, as it
already knows it.
Don't let any callers or emails tempt you into
changing your healthcare coverage, either, as they can be touting either a
phony nonexistent plan or a plan that offers much less coverage than it may
seem to. It is good to shop around for the best Medicare plan
for yourself, but do your own digging and shopping -- don't respond to
strangers contacting you.
The more you learn about scams and scamming
techniques, the less likely you'll be to fall for them. As you go through your
financial life, saving, investing,
paying taxes, collecting benefits, getting healthcare, and so on, be alert for
those who want to take advantage of your hard work.
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