Mar 23, 2023 4 min read

We are in the middle of tax preparation season.

This year, you have until April 17 to file your return. If it will not be complete by that date, you can file an automatic extension for to get another 180 days to complete the forms. While this gets you more time to file, it does not get you more time to pay. You must estimate how much in taxes you will owe send it in with your extension.

There is a lot of tax fraud and identity theft that happens at this time of the year. Last year, an estimated 8 million returns may have been tampered with. This cost the government and tax payers billions of dollars in losses. File your taxes early so that there is less of a chance someone else can file a false return and try to receive your refund.

I often receive emails claiming to be from the IRS asking me for information or saying there is a problem with my return. I immediately delete all of these emails because the IRS does not communicate through emails, text messages or social media. Do not clink on links in these emails because they can transfer you to an official-looking but phony site or plant a virus on your computer that could steal your identity.

If there is an issue, the IRS will send a series of letters through the post office. They only call on the telephone occasionally, and then only after a series of unanswered letters. Scammers often call and demand instant payment sometimes threatening to send the police to arrest you or maybe end your Social Security benefits. The police do not work for the IRS and they have no power to change any SS benefits.

Sometimes criminals will demand to be paid in gift cards or cyber currency. This is a red flag of fraud because government agents will never ask for these alternative payment methods. Crooks can also make your Caller ID look like it is coming from an official telephone number and emails and websites can appear official looking. You must be very careful. If you know there are not any issues with your return, talk to your preparer or wait for a letter in the mail.

When you are writing checks to the government make them payable to the Treasury Department or spell out Internal Revenue Service. Do not make them out to the IRS. If a criminal intercepts your check, they can easily change the payee from “IRS” to “Mrs. Smith” and cash your check.

If you think your tax bill is too high, now may be the best time to be proactive and try to lower your next year’s bill. To keep you family’s overall tax bill as low as possible requires a plan that must be completed before the end of the tax year. Sometimes tax planning will create more taxes short term in order to lower your lifetime tax bill.

Things like Roth conversions have you pay taxes now, but eliminate higher taxes on the growth in the future. If you think taxes will go up in the future, a conversion may make sense. Roth’s also do not have required minimum distributions to spouses so that can help keep future required distributions to a minimum upon the death of one spouse, and maybe save on Medicare premiums down the road. Work with a planner who will focus on tax issues.

Your Financial Future is written by certified financial planner Gary W. Boatman, MBA and CFP, who also wrote the book, “Your Financial Compass: Safe Passage Through The Turbulent Waters of Taxes, Income Planning and Market Volatility.”

If there is an area that you would like to see discussed in the column, send your suggestions to gary@BoatmanWealthManagement.com.