The Internal Revenue Service (IRS) is warning taxpayers against a couple of income tax refund schemes that are getting traction on the internet.
Fake W-2
The first suggests that people use tax software to create a fictitious W-2. In it, a fraudster would create a wage statement with 20K or 30K more in federal and state withholding.
Once they complete their income tax return, they potentially receive a much larger income tax refund.
Sick And Family Leave Credits
Another scam uses Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals. In it, they create fictitious household workers and claim the credit.
In order to fill out the form, the social security numbers of the fake household workers must be included. When the income tax return is completed, they again, potentially receive a much larger refund.
It should be noted that the only way these scams work is with an electronically filed return. The speed at which these refunds are processed is what the criminals use to get away with the money.
But because these are electronically filed returns, the IRS and State Taxation Agencies are working with payroll services, large employers, and the Social Security Administration to verify W-2 information. As such, returns that look fictitious aren’t being processed.
Either way, they know where you live. Anyone caught in this sort of fraud will face additional tax, interest, penalties, and jail time.
These schemes are some of the most basic definitions of Income Tax Evasion that I’ve ever seen. Don’t do the crime if you can’t do the time.
Let me leave you with this.
We’ve all been watching the markets and are amazed at what they’ve done. So far this year the S&P has rebounded more than 5%. Last year it was down over 19%.
Many ask what will happen with the rest of the year. If things keep getting better, then who would possibly have a problem?
But will happen if the economy goes into a recession?
There have only been four times since the Great Depression that we’ve had two years in a row that both went down. Look it up for yourself at the following web address.
https://www.macrotrends.net/2324/sp-500-historical-chart-data
In each of those instances, the second year was worse than the first. In the instances where there were three bad years in a row, the third was even worse than the second.
But equities always win the day in the end. Given the additional risk of equities, over time they perform substantially better than bonds.
I’m trying to tell all of you to be patient.
Bear Markets are where the wealthy earn the name wealthy. The biggest difference between old money and new is that old money has been through enough of these to know how to act.
Is it possible that this year will be even worse than the last? Absolutely. Many consider it to be probable.
Does that mean that you should cash out all of your investments, be forced to pay significant capital gains taxes, and wait for the markets to rebound? That’s what new money would do.
Have a little faith. Grow a pair. Toughen up Buttercup. These situations always work themselves out in the end.
Should you constantly assess risk in your portfolio and possibly move investments around? Absolutely. This is true whether you’re in a Bear or a Bull Market.
But good investments abound no matter what type of market we find ourselves in. And if your money isn’t working for you, then you’re losing to inflation at the very least. You’re also probably losing the possibility of a great retirement.
Please remember that your job as an Entrepreneur is three-fold. You have to learn how to make it, how to save it, and how to invest it. If you can’t do all three, you’ll force yourself into a lower-class situation.
Sooner or later, you’ll no longer be able to make it.
We’re all going to get through this. Let’s get through it together.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. Whether you need Employee Retention Credits, M&A Due Diligence, Payroll Services, or Accounting and Tax Work, you have but to ask. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
888-310-0300
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