Resource

Paying Taxes, Safe and Sound

CALPIRG Education Fund
Last updated: 6/16/2014

Paying taxes is our civic responsibility, but it can be confusing and stressful. To help consumers, CALPIRG answers key concerns as they set to pay their federal and state taxes.

Q. How can I file my taxes?
A. The easiest and fastest way to file your taxes is online using a trusted and secure service. Alternately, you can either file your taxes by mail using 1040 forms available for download from the IRS here, or through a professional accredited tax service.

Q. Which online tax service should I use?
A. Filling taxes involves sensitive personal information and needs to be done right. For a complete list of accreted free federal online taxes services see here; for a complete list of accredited free Californian state online taxes services see here.

Q. Are all online tax filing services the same?
A. No, while most are legitimate there are some dubious tax services online who may take advantage of your personal information to commit theft or other fraud. Make sure you only use accredited services.

Q. What are the warning signs of a dishonest tax preparer?
A. You could be dealing with an unscrupulous return preparer if they:
     •    Do not sign the return or place a Preparer Tax identification Number on it.
     •    Do not give you a copy of your tax return.
     •    Promise larger than normal tax refunds.
     •    Charge a percentage of the refund amount as preparation fee.
     •    Require you to split the refund to pay the preparation fee.
     •    Add forms to the return you have never filed before.
     •    Encourage you to place false information on your return, such as false income, expenses and/or credits.

Q. How much does it cost to file taxes online?
A. Taxpayers with a 2010 Adjusted Gross Income (AGI) of $58,000 or less can visit www.IRS.gov to prepare, complete and e-file their federal tax return free of charge. Eligible residents of California can file state taxes for free using CalFile online.

Q. My AGI is more than $58,000 can I still fill my taxes for free?
A. Yes. Many companies provide free federal tax services, yet most charge for completing online state tax forms. As the below table shows, prices can vary so it is worth your while to shop online for the best offer. Note – prices quoted below are starting prices only and may vary for individuals with more complicated returns.

* For individuals under 20 years old, $7.95 for all others    
**Free if federal AGI is less than $20,000

Q. What are the “instant” tax rebates I see offered?
A. IRS officials reminded taxpayers that there is no such thing as an "instant" tax refund. "Instant" refunds offered by some tax services are often Refund Anticipation Loans (RALs), and come with high fees and interest rates. While these loans may sound appealing at first glance, RALs can reach annual interest rate of more than 37%.

Tax preparers who offer RALs are required to advertise them accurately, must be transparent about the costs involved, and provide itemized detail of service charges, including charges for tax return preparation, electronic filing, and providing or facilitating the RAL.

Q. What is the fastest way to get my tax refund?
A. The fastest way to get a tax refund is to submit your returns online coupled with direct deposit.

Q. I have some questions about filling out my tax form, where can I get answers?
A. The IRS provides free tax preparation tools and a Questions & Answers page online and toll-free telephone assistance for Individuals at 1-800-829-1040 and for businesses at 1-800-829-4933.

California State Controller John Chiang, in partnership with community organizations, is providing free tax preparation services for low and moderate income taxpayers. Taxpayers can receive assistance from volunteers registered through the Internal Revenue Service’s Volunteer Income Tax Assistance (VITA) program. For dates, state-wide locations, and appointment information see here.

Q. I received an email from the IRS, asking for personal information. Is that for real?
A. No, the IRS does not initiate email correspondence with taxpayers. A common phishing scam involves a phony yet official looking email from the IRS informing recipients that they need to click on the email's embedded link that takes them to a website which asks for their personal information. All such requests  are scams. If you receive such an unsolicited email or text message report it to the IRS by sending it to phishing@irs.gov

Q. What are the signs of a tax scam that can put me at risk of theft?
A. There are several warning signs taxpayers can look out for.

  1. An attachment is a big tip-off that the email is phony since legitimate tax companies will never ask you to open an attachment.
  2. Emails that mention a tax refund or threaten an audit unless you respond are often fake attempts to get your personal information.
  3. Misspelling or incorrect use of official names, poor grammar, or odd phrasing are often indications that an email or letter are fraudulent.
  4. Taxpayers should be wary of unsolicited emails or letters asking for personal and/or financial information, such as your name, Social Security Number, bank or credit card account numbers.

Q. What are the signs that I may have been the victim of identity theft?
A. If more than one tax return was filed in your name or IRS records show you were paid by an employer you aren’t familiar with, someone may have used your personal information to submit false tax returns on your behalf.

Q. I think I was the victim of identity theft, what should I do?
A. Anyone who believes their personal information has been stolen and used for tax purposes should immediately contact the IRS Identity Protection Specialized Unit.  For more information, visit www.IRS.gov/identitytheft or call 1-800-908-4490.

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