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Watch Out for This New Tax Scam

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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Tax season can be the most profitable time of year for savvy thieves. And just a week into filing season, the IRS has uncovered a new trick cybercriminals are using to scam you out of your money.

The IRS warns tax preparers and consumers about a new scam in which criminals are using consumers’ account details to deposit refunds. They then contact the consumer posing as debt collection agency officials, claiming that the refund was deposited in error, and have the consumer send the funds directly to them.

This scheme is only one of many that thieves will use to dupe you out of your money this tax season, the IRS warned in a statement Friday.

During tax time, the IRS receives millions of fake tax returns as a result of what the FBI refers to as Stolen Identity Refund Fraud (SIRF) crimes, resulting in billions of dollars in fraudulent refunds every year.

Let the IRS know immediately if you think you’ve been a victim of a tax scheme. But the best course of action, whether you’re a consumer or a tax professional, is to protect yourself from becoming a victim in the first place.

Although this latest development shows that with the help of technology, thieves are becoming savvier, an old trick is at the root of the majority of SIRF crimes. Someone, in this case, a tax preparer, takes the bait and clicks a malicious link in a phishing email.

The IRS is urging tax preparers to review the Security Summit’s Don’t Take the Bait campaign, which highlights numerous scams cyber thieves and fraudsters use to fool tax professionals. Tax pros should undergo a cybersecurity overhaul to better secure their clients’ valuable data. Ask your tax preparer if they are taking these steps.

Here are other scams, and ways to protect yourself from them during tax season.

Don’t take the bait

Most of us have learned not to fall for phishing scams, but they can be convincing, especially if you’re not sure how the IRS operates. Don’t open suspicious emails or click on links or attachments in emails from people you don’t know.

The IRS doesn’t contact consumers via email, social media, or text messaging channels, and would never request personal information through any of those platforms. If you think you’ve been contacted by an IRS imposter through one of these channels, immediately report the interaction.

What about those phone calls?

Scammers may alter their phone numbers to make it look like the IRS or a government agency is calling.

These callers may use fake IRS titles and badge numbers to seem official. Those trying an IRS impersonation scam might even know your name, address and other personal information. But don’t be frightened into making a costly mistake.

If you don’t owe an immediate payment, hang up. Then, report the call to the Federal Trade Commission.

If you owe taxes, or you’re not sure, hang up and call the IRS at 800-829-1040 where IRS workers can help you.

Choose a tax preparer you trust

In the same way that you wouldn’t leave your children in the hands of a babysitter you don’t know, don’t put your money and critical information about your life in the hands of someone you can’t trust.

Half of the nation’s tax returns are prepared by paid preparers, but only 40 percent are required to adhere to the IRS professional standards, according to 2015 data from the Consumer Federation of America. If data is taken from the wrong tax preparer, you could pay the price by having your identity stolen.

Do your homework when searching for someone to help you do your taxes. The IRS has an online directory to help you find a certified tax pro.

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KaToya Fleming
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KaToya Fleming is a writer at MagnifyMoney. You can email KaToya here

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Federal Student Loan Rates to Ease Back Down for 2019-2020

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

After back-to-back increases in the previous two summers, interest rates for federal student loans are headed lower for the coming year.

Congress sets federal student loan rates each spring, based on the yield of the benchmark 10-year Treasury note, and the new interest rates go into effect on loans disbursed from July 1 onward.

While the Department of Education had yet to post the new rates on its site, news reports put the decreases for July 2019 to June 2020 as:

  • Undergraduate Direct Subsidized and Unsubsidized Loans: 4.53% (down from 5.05%)
  • Graduate Direct Unsubsidized Loans: 6.08% (down from 6.6%)
  • Graduate PLUS and Parent PLUS Loans: 7.08% (down from 7.6%)

Federal loan interest rates last declined in July 2016, with the undergraduate direct loans falling by about half a percentage point to 3.76%, for example.

Federal student loans also come with loan origination fees, but those generally change in October. For the 2018-19 period they were:

  • Undergraduate Direct Subsidized and Unsubsidized Loans: 1.062%
  • Graduate Direct Unsubsidized Loans: 1.062%
  • Graduate PLUS and Parent PLUS Loans: 4.248%

For more on the true costs of federal student loans, check out our complete guide, including all the various types of loans and strategies for repayment.

This report originally appeared on Student Loan Hero, which like MagnifyMoney, is part of LendingTree.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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