Tax Goddess Featured in New Article on Tax Strategies This Week!

3. Paying Your Identity Thief’s Tax Bill

Arizona resident Cliff Goodenough found himself embroiled in a decades-long battle with IRS, afterbogus income tied to earnings at Las Vegas casinos kept showing up on his Social Security, reported CNBC in 2013. Despite Goodenough’s attempts to illustrate the income wasn’t his, the IRS moved to collect on it, and, when he didn’t pay, they tapped his bank account.

Goodenough was ultimately able to clear his name after receiving a letter from the IRS in 2004 that bore his Tax ID number under a different name. Turns out, a Chicago businessman who had fled his personal and financial problems back in 1979 was using the number to commit identity theft. The man ultimately plead guilty to fraud and was ordered to pay Goodenough nearly $11,000, CNBC said.

4. Dealing With an Inept Auditor

Just like in any profession, there are good auditors and bad auditors. Shauna Wekherlien, the owner of Tax Goddess Business Services PC in Scottsdale, Ariz., told MainStreet a yarn about a client who experienced one of the bad ones. Wekherlien said a young auditor was sent to look into a business’s record books, and thought that there was a November bank statement missing.“Of course, the auditor had the November bank statement, but didn’t understand the bank statements didn’t close exactly on the first of each month and end on the 31st of each month … The auditor actually threatens my client, saying that if he did not provide the November bank statements he would have the ‘entire IRS come down on him so hard that he wouldn’t know what hit him.’ It was at this point that we requested a new auditor. When you have an auditor [who] doesn’t know how to read bank statements, you know you’re in trouble,” Wekherlien said.

5. Having Your Refund Stolen

Taxpayer identity theft is becoming all too common. The IRS is actually anticipating about $21 billion in tax refund fraud this year. Pamela Knighton, a social worker from Cuthbert, Ga., is one of the Americans who had their tax refund stolen back in 2014. According to CNN, Knighton had to wait more than six months for her $1,000 refund — money she badly needed, given she was making less than $25,000 a year.

“I’m one of the working poor and don’t have a lot of money,” she told CNN. “I’m still trying to buy my own home and I’m always running low on my [bank] account.”

Remember, there’s no failsafe when it comes to taxpayer refund fraud, but you can minimize the odds of falling victim by filing early. If you know your Social Security number or other identifying information has been compromised, you should keep an eye on your financial accounts and your credit to prevent other types of identity theft as well. You can check your credit reports every year for free at AnnualCreditReport.com and you can monitor your credit scores for free every month on Credit.com.