Monday, April 03, 2006

Still More Tax Traps to Avoid

ABC correspondent Elisabeth Leamy does a timely (taxes are due in two weeks except 15 days in parts of New England) piece on ways taxpayers can go wrong in getting their taxes together. First on her list--watch out for fast refund promotions by tax preparers. In some cases, this may involve a tax anticipation loan with interest that will water down your net refund. A second danger is having the preparer finding a retirement or other investment vehicle for your refund (see also last month's "BlockHeads Again" post); not all tax preparers are retirement experts. A nasty recent third danger is fake e-mails pruportedly from the IRS regarding taxes but actually a "phish" for identity theft. Next on her list--failing to take advantage of itemizing (keep those records organized!). Finally, be on the watch for fraudulent tax strategies, such as constitutional objections to taxes, setting up a "church" for tax reasons or tax "credits" based on ethnic status and past history.

Ms. Leamy has done a valuable service. The list may not be exhaustive but does provide a concise list of a number of common tax pitfalls.


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