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Because of the coronavirus pandemic, 2020 may be a tax year like no other. Here are answers to some of your top questions. USA TODAY

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Income tax season is in full swing, as are the annual tax scams, predatory lending practices and refund-draining products that go along with it. This year, the COVID pandemic has created even more schemes to watch out for. 

Struggling families may spend more than necessary to get their tax refund faster, and scammers are targeting pandemic assistance programs such as unemployment, stimulus payments, donations to charities or business loans. 

New Jersey and the Internal Revenue Service pushed back the state and federal income tax filing deadlines from April 15 to May 17, 2021, though New Jersey’s first quarter individual estimated tax payments are still due on April 15. But for New Jerseyans who are struggling financially, they may want to take action to get their refunds — and possibly stimulus checks — as soon as possible. 

Eligible families that didn’t receive their stimulus check, or believe they are owed more, can claim the payment on their taxes: Just look for the Recovery Rebate Credit line. The Treasury Department estimates close to 8 million households haven't yet accessed their economic impact payment. 

Be on the lookout for calls, emails, texts or social media posts from bad actors claiming to be from the IRS asking for you to take action to receive relief funds or tax refunds.

“The IRS does not demand immediate payment to access your stimulus payment or tax refund,” said Leila Amirhamzeh, the director of development for New Jersey Citizen Action, a grassroots organization that helps New Jerseyans complete their taxes. “Don’t click on a link that asks you to verify a payment. These are some of the most common forms of IRS scams, a phishing attempt that can install some kind of malware on your device. Don’t respond, and call the IRS if you want to verify if you have to take some action.”

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For those with questions, or for free tax preparation, help is available to eligible filers who earn low to moderate income, as well as to the disabled, elderly or non-English speakers from a Volunteer Income Tax Assistance site. Visit https://irs.treasury.gov/freetaxprep, enter in your ZIP code, and you can find a local or statewide organization that will help you file your taxes or get your stimulus check. Taxpayers can also call 211 for assistance. 

If taxpayers choose to pay for a tax preparation service and expect a tax refund, experts warn to be cautious about cash advances on those refunds that tax prep companies or payday lenders may offer because they can include high fees that eat into the refunds.

Refund anticipation loans (RALS) are loans that provide a taxpayer with their estimated tax refund earlier than the IRS issues it, but they can come with high interest rates and filing fees. 

“The problem is, you are taking this loan based on what you think the refund should be, but if for some reason there was a mistake in the calculation, you may wind up owing money because you took out a loan that did not accurately reflect your refund,” Amirhamzeh said. 

“On top of that, there is a cost associated with these, because they are loans," she said. People short on cash are often attracted to such loans in order to get their expected tax refund a few weeks early, she said.

Refund anticipation checks (RACS), also called “refund transfers,” delay tax preparation fees until the refund arrives. A bank will open up a temporary bank account for the taxpayer. Once the IRS deposits the refund, the preparer deducts the tax preparation fee and any other fees included, leaving the rest to the taxpayer by direct deposit, prepaid card or check, and then closes the account. 

The National Consumer Law Center says RAC fees can range from $20 to $64, depending on the preparer and service, and they don’t deliver the tax refund more quickly than the IRS will distribute it. 

“Advocates warn consumers to carefully compare the benefits of a RAC to its cost before taking one,” the National Consumer Law Center wrote in a February 2021 report. “Paying $40 to defer a tax preparation fee of $300 for three weeks is equivalent to paying an annual percentage rate of 232% for a short-term loan to pay tax prep fees.”

As for tax and stimulus scams, the IRS and New Jersey Attorney General’s Office release lists of the most common threats. Among the major things to watch out for: 

  • Threatening phone calls: An impersonator calls with a threat of arrest, deportation or license revocation if the taxpayer doesn’t take an action, such as paying a fake tax bill or providing personal information. Hang up and do not provide any personal information. 
  • Economic Impact Payment and refund theft: Scammers file false tax returns to divert checks to incorrect bank accounts or addresses. Be careful of posting any sensitive information online that can be used by scammers. 
  • Dishonest tax preparers: Avoid preparers who ask you to sign a blank tax return, don’t include a Preparer Tax Identification Number on the forms, promise large refunds before looking at your records, or charge fees based on the percentage of your refund, the IRS recommends. For tips on choosing a preparer, visit https://www.irs.gov/tax-professionals/choosing-a-tax-professional.
  • Scam charities: Scammers exploit situations like the pandemic to coax donations that don't end up going to the cause that is advertised. Use the IRS search tool to find legitimate charities at https://www.irs.gov/charities-non-profits/tax-exempt-organization-search, and use sites such as Charity Navigator to see how organizations are rated at https://www.charitynavigator.org/
  • COVID-19 grant scams: If someone contacts you over social media about government grants claiming to be a government agency, don't click the links or provide personal information. Look up the agency site and contact them to verify the programs available. 

If you believe you’ve been cheated or scammed, you can file an online complaint with the Division of Consumer Affairs under the New Jersey Attorney General’s Office at https://www.njconsumeraffairs.gov/Pages/File-a-Complaint-old.aspx or call 1-800-242-5846. 

To track your stimulus payment, visit https://www.irs.gov/coronavirus/get-my-payment

To track your tax refund, visit https://www.irs.gov/refunds.

Ashley Balcerzak is a reporter in the New Jersey Statehouse. For unlimited access to her work covering New Jersey’s Legislature and political power structure, please subscribe or activate your digital account today.

Email: balcerzaka@northjersey.com 

Twitter: @abalcerzak 

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