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Wednesday, February 12, 2014

Tax time tips for seniors and caregivers

Help seniors avoid scams, get tax credits for being a caregiver, find local help with taxes

Tax-related scams and resources

This time of year, fliers, yard signs, emails and other advertisements offering tax preparation assistance and promising bigger, faster refunds are popping up everywhere. When you alone are ultimately responsible for the information on your tax returns, how do you separate the professionals from the scammers?

Tax time is a good time of year to remember that older adults are high profile targets for financial exploitation and abuse. Research shows that as many as five million older adults are victims of elder abuse each year. Financial exploitation, also known as financial abuse, is believed to cost seniors an estimated $3 billion annually. It is a threat to the health, safety, dignity and independence of vulnerable older adults, but you can help prevent it from happening.

Regarding your tax refund, the following scenarios should be a warning sign:

  • You are approached by an individual or company who offers to prepare your taxes, and help you get a larger tax refund than other preparers. The preparer may even base his/her fee on a percentage of your refund.
  • The preparer may approach you at your church or in your neighborhood or housing complex. He/she may also contact you via email or through a flier or advertisement.

Even though they may not be required to file an income tax return, seniors are a prime target for tax scammers. They are led to believe they should file a return to receive social security rebates for excess withholding or that they are eligible for certain tax credits that could get them a refund.


The IRS`s Criminal Investigation Unit offers the following tips for avoiding tax preparation scams:

  • Be cautious of tax preparers who claim they can get larger refunds than other preparers, or who base their fee on a percentage of your refund.
  • Only use a reputable tax professional that signs your tax return and provides you a copy.
  • Consider whether the individual or firm will be around to answer questions about the preparation of the tax return months, or even years, after the return has been filed.
  • Check the preparer`s credentials. Only attorneys, certified public accountants (CPAs) and enrolled agents can represent taxpayers before the IRS in all matters including audits, collections and appeals.
  • Find out if the preparer is affiliated with a professional organization that provides its members with continuing educational resources and holds them to a code of ethics.
  • Ask friends and family whether they know anyone who has used the tax preparer before, and whether they were satisfied with the service they received.
  • Never share personal or financial information appearing as a request by email from the IRS. The IRS does not initiate requests for personal or financial information via email, text messages or social media


Reporting Tax Frauds and Scams

If you think you are a victim of a tax scam, report it right away! Contact the Cincinnati office of the IRS Criminal Investigation Unit at (513) 263-3335.


Tax Relief for Caregivers

Caregivers who pay for some or all of the cost of caring for a relative may be able to claim that relative as a dependent. To be eligible, the relative’s total income for 2013 must be less than $3,900 and the caregiver must have paid for at least 50 percent of the relative’s support. Income does not include non-taxable Social security or disability payments, but it does include pensions, interest on bank accounts, dividends and withdrawals from retirement plans.  Caregivers can even claim non-relatives, provided the individual was a member of the household for the entire tax year.

Caregivers who are able to claim a relative as a dependent can take a $3,900 tax exemption and may be able to deduct services and items necessary for their loved one’s care based on meeting specific cost and income thresholds. Contact a licensed tax professional for more information on tax breaks for caregivers or to determine eligibility.


Free Tax-Prep Assistance

In cooperation with the IRS, the AARP Foundation Tax-Aide program helps low- to moderate-income taxpayers by assisting with tax services and ensuring they receive applicable tax credits and deductions. The program is available free to taxpayers with low and moderate income, with special attention to those 60 and older. Click here for more information and to find a location near you.

Visit Council on Aging`s Help4Seniors Resource Directory for additional information about local tax prep assistance programs. 

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