IRS Begins Processing Tax Forms Affected by Late Tax Changes

According to their latest press release, the IRS has finally begun processing individual tax returns affected by legislation enacted in December. The agency is also reminding taxpayers that they can e-file immediately. And I would like to remind you to get on top of your taxes, procrastination does not pay!

IRS.gov reports:

On Monday, IRS systems began to accept and process both e-file and paper tax returns claiming itemized deductions on Form 1040, Schedule A, as well as deductions for state and local sales tax, higher education tuition and fees and educator expenses.

“The IRS is now accepting all the 1040 forms,” IRS Commissioner Doug Shulman said. “We worked hard to update our systems and get the changes in place as quickly as possible. We appreciate the patience of those impacted by the delay. We urge taxpayers to use e-file with direct deposit, and they can get their refunds within days.”

In late December 2010, the IRS announced it would delay processing of some tax returns in order to update processing systems to accommodate the late tax law changes. These tax law provisions were extended by the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, which became law on Dec. 17.

For the vast majority of taxpayers, the filing season this year began on time in January. Most taxpayers claiming itemized deductions and the other delayed forms file later in the year.

The IRS urged taxpayers who haven’t filed yet to use e-file instead of paper tax forms to ensure accuracy and to get refunds fast. Taxpayers can do their taxes for free through Free File, which is brand-name software or online fillable forms. Free File is available exclusively at www.irs.gov/freefile. Anyone who makes $58,000 or less can use Free File software. There are no income limits to online fillable forms. Both Free File software and Free File Fillable Forms allow taxpayers to prepare and e-file their federal returns for free.

The IRS worked closely with the tax software industry and the tax professional community during the reprogramming process to minimize disruptions for taxpayers and ensure a smooth tax season.

Read more here

Tax-Time Tidbits You Need to Know

The Everett Washington Herald has put together a useful article with 6 things everyone should know for tax season. You can find a portion of their list below, or the full text at HeraldNet.com.

Three more days: Federal taxpayers have until April 18 rather than the normal April 15 to file returns this year.

File for free: The IRS "Free File" program is up and running. It is a chance to prepare and file your federal return for free. Go to IRS.gov if your adjusted gross income is $58,000 or less.

No account? No problem: If you do not have a bank account, keep an eye out for a pilot program that offers a low-cost way to speed tax refunds.

The Department of Treasury recently mailed out letters to 600,000 low- and moderate-income individuals nationwide who have limited or no access to a traditional bank account.

Taxpayers who receive the letters can consider activating a MyAccountCard Visa Prepaid Debit Card in time to have their 2010 federal income tax refunds directly deposited onto those cards.

Such cards sure beat the high cost of a refund anticipation loan.

Download paperwork: Tackle the tax season one piece of paperwork at a time.

Start finding the current 1099 forms for the bank accounts, CDs, etc., that you had on the 2009 return.

More here

Taxes: 5 Things to do Now

Check out this video from CBS Money Watch on what you can do now to prepare for tax season.

1. Pay attention & open your mail

2. Gather credit card summaries/review checking account for potential deduction (charitable, job search costs, miscellaneous)

3. Expect revisions from investment or brokerage accounts

4. Review your 2009 return as guide to what’s missing

5. Determine whether you will hire a CPA or do it yourself

Continue reading here

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Spring Cleaning for your Finances

Tax season has come and gone and spring is here in full force. During these transitional weeks many people take on extra spring-cleaning duties. However, in addition to cleaning out your garage, or spending hours getting your yard ready for a huge pool party, I recommend taking a few minutes to clean up your finances.

Clean out your Filing Cabinet

The IRS recommends you keep copies of all tax returns, however additional tax related documents – such as W-2s, 1099s, and receipts – do not need to be kept more then a few years. You can clear up some room in your filing cabinet by shredding any documents that do not need to be kept. You should also think about getting rid of any documents that can be replaced such as credit card and bank statements you still have from previous years.

Review your Credit Report

All taxpayers are allowed one free credit report per year. While doing your spring cleaning it is a good idea to request a copy of your credit report to make sure there are no mistakes or unfamiliar activity. It is better to address these issues sooner then later and if you have not reviewed your credit report recently, I highly recommend doing so as soon as possible.

Create a Plan for your Debts

Debt is a serious problem for millions of Americans, but it does not have to be. By taking the time to establish a plan to deal with your debt, you will see that it does not have to ruin your life. Start paying off credit cards with the highest interest rates, and if your debt is seriously out of control you might want to consider a debt settlement program.

Consolidate Accounts

If you have more than one banking account then you might want to spend some time consolidating your accounts. Unless you have a banking account for your business you probably do not need multiple checking and savings accounts. It can be very difficult to manage your money, and plan a path to get out of debt when you have dozens of bank statements to review. However, by consolidating your accounts you can keep better track of your finances, and depending on where you do your banking you can take advantage of additional features such as online bill payments.

Track your Spending and Start a Money Calendar

If you find yourself scratching your head at the end of every month wondering where all of your money went then you might want to track your spending a little better. Keep a receipt from every purchase you make, and after a few weeks you should have a pretty good idea of where your money is going. It can also be helpful to create a money calendar listing days that you get paid, and due dates for important bills.

Automatic Savings

Most banks will allow you to setup automatic transfers to your savings account, and this can be a great way to help build up an emergency savings. Even if it is only a $10 or $20 reoccurring transfer it can still help you get in the habit of saving money for a rainy day. Just make sure that your savings account is not charging a high monthly fee.

Prepare for Next Tax Season

It is never too early to begin preparing for next tax season. By keeping a close eye on your tax liability, credits, and deductions, you can avoid having to owe the IRS next April. It is also a good idea to create a new folder in your filing cabinet so that you can keep all of your tax related documents in one safe place. Finally, you might want to adjust your withholdings if you substantially over or underpaid on your taxes last year.

How to Make Next Tax Season Less Stressful by Preparing Throughout the Year

April is usually a stressful month for most Americans and if you were one of the millions of taxpayers who were rushing to beat the tax deadline last week, you might want to take more action during the year to avoid the unnecessary stress next tax season. Earlier this week, the RDTC Tax Help Blog posted a great entry on how to start prepping for next tax season throughout the year. You can find a few of the tips below, or check out the full article here.

Collect and Store 2009 Tax Documents

Now that tax season is officially over it is time to store your financial records and copies of your tax returns. Depending on how the year goes, you might be able to use your tax return as a guide to prepare and file next year’s tax return.

Adjust Withholdings

If you had either a large refund, or a tax bill due this year then you might want to consider adjusting your withholdings. You can ask your employer for a W4 and have either more or less withheld from your paychecks. This can prevent an unwelcome tax bill next year.

Even if you received a refund, you should still consider adjusting your withholdings. By giving the IRS more money out of each of your paychecks than necessary, you are basically giving the federal government an interest free loan. Additionally, by changing your withholdings you can get more money every pay period.

Continue reading at RDTC.com…

Few Will Use Tax Refund to Indulge: Poll

A new poll done by Bankrate.com and Princeton Survey Research Associates International has found that fewer Americans will go shopping with their tax refunds this year. According to the study (via MSNBC.com) an estimated 84% of U.S. taxpayers intend to pay bills, eliminate debt, or buy essential items with their refunds.

Only 7 percent plan to fritter the money away on a shopping spree or vacation.

On the other hand, 40 percent of those who believe they owe taxes say they are not prepared to pay up. Nevertheless, only 6 percent plan to borrow money, though 17 percent say they intend to set up an installment plan with the IRS.

And six in 10 people (63 percent) will pay their taxes with funds straight from their bank accounts.

ankrate commissioned Princeton Survey Research Associates International to gauge Americans' feelings about the looming tax deadline and whether or not they're prepared to pay the taxman.

Overall, 30 percent of Americans intend to pay down debt with their tax refund, 28 percent say they will save or invest it, and 26 percent have earmarked those funds for necessities such as food or utility bills.

Continue reading at MSNBC.com…

7 Lucky Tax Prep Tips to Celebrate St. Patrick's Day

I am a huge fan of St. Patrick’s Day, as you can probably tell from this picture of me in my leprechaun outfit from 2008…

To celebrate the luck of the Irish, I thought it would be fun to share 7 “lucky” tips for getting your return prepared and filed this tax season.

1. Do NOT Wait Until April 14th

Although the tax deadline is April 15th (just a few weeks away), you should try to get your return prepared and filed as early in advance as possible. If you have not finished your return already, then I highly recommend doing so. Tax offices and accountants get overwhelmed during the first two weeks of April and sometimes it can be almost impossible to get an appointment. Even if you are planning to prepare your own return you never know what obstacles you might run into, such as missing documents or endless piles of paperwork to sort through.

2. Request an Extension if your Rushed

It is always better to request an extension from the IRS then send in a return full of errors. If you feel rushed, then take a deep breath, complete and file IRS Form 4868, and will have an additional six months to file your income tax return. However, keep in mind that this is an extension on the deadline to file your return, not an extension on the deadline to pay any taxes owed. If you do have an unpaid tax liability, the IRS will probably assess a late payment penalty.

3. File Even if you Cannot Pay

Unfortunately, thousands of taxpayers put off filing a tax return because they are afraid of having to pay a huge IRS bill. However, even if you cannot pay Uncle Sam you should still file a return. The IRS assesses separate penalties for not filing and for not paying your taxes, so by filing a return (or an automatic extension) you can help reduce the amount of fees you will have to pay the IRS.

4. Always e-File

Whenever possible you should e-file your income tax return. It is faster, more convenient, and more accurate than filing a paper return. Additionally, you can receive your refund in as little as 10 days if you e-file and select to have your refund directly deposited into a bank account. On the other hand, if you file by mail, it can take over 10 weeks to get your refund.

5. Pay with Plastic

If you owe the IRS, and do not have the cash to make the payment, you can always pay with a credit card. The IRS accepts payments through the two companies listed below. Both accept tax payments either over the phone or through their websites and allow you to pay with American Express, Discover, MasterCard or VISA. However, there is a fee for paying through these companies.

Link2Gov Corp.

(888) PAY1040

Official Payments Corp.

(800) 2PAYTAX

6. Get Help from a Professional

If you are confused about your tax returns, I highly recommend seeking help from a professional. Click here to find the closest Roni Deutch Tax Center to your home and you can have one of my highly trained professionals prepare your return. If there aren't any locations near you, then check out this list of tips on how to find a quality tax specialist from the RDTC Tax Help Blog.

7. Use your Refund to Reduce your Tax Liability

If you get a refund from the IRS this year, I highly recommend using the money to do something smart—don’t waste it on a purchase you will regret in the future. I posted a useful article on how to use your refund to reduce your 2010 tax liability earlier this month. Some suggestions include opening up a traditional IRA, purchasing an I-Bond or making charitable contributions. You can find the full list of tips here.

CNN Headline News Appearance

I was interviewed last Friday during a segment on CNN’s Headline News. During my appearance I offered general tax season advice and also explained how the IRS is going to be extra aggressive to recoup lost revenue. If you missed my interview then be sure to check it out in the embedded video below.

Roni Deutch Tax Center Ready to Help Local Volunteers

Last week a Roni Deutch Tax Center franchisee was featured in a NorthJersey.com news story because of their fundraising effort for their local fire department. I am proud to see the charitable nature of this storeowner, and the enthusiasm their office has for their local community. Checkout the following article from NorthJersey.com.

The Roni Deutch Tax Center located at 24-11 Fair Lawn Ave. in Fair Lawn, will be conducting a fundraiser for the Fair Lawn Fire Department and First Aid Squad. This tax season, from now until April 15, the Tax Center will donate $20 to the fire department and first aid squad for every tax return completed.

"We appreciate everything we can get and it's very nice of them to do something to support our efforts," said Jay Bender, a 39-year fire department volunteer of Company 4.

"The community should be aware and support our fire department and first aid squad," said Roni Deutch Tax Center Manager Lisa Hartensveld.

Last year, the tax center partnered with the first aid squad and raised just over $200. This will be Roni Deutch's second tax season in Fair Lawn, and the company hopes to raise even more money this year.

"The money does add up very fast and this is our way of giving back to the community" said Harensveld.

Every customer who wishes to participate in the fundraiser must mention the fire department or rescue squad when they come in to have their taxes completed. The customer will not be charged the $20 for the donation; it will be donated by the tax center.

For more on the fundraiser, call the Roni Deutch Tax Center at 201-663-9055.

Planning Early for Tax Season

Yesterday, my team shot another video for our tax tips video series. In this episode, host Edward Lester discusses how to plan early for next tax season. Although April 15th is still a few months away, it is never too early to start preparing. You can watch the embedded video below and be sure to head over to my YouTube channel to subscribe to my videos.

IRS Seeks Comments from Government Agencies at Upcoming Forum

Yesterday the IRS posted a new press release announcing that “the second in a series of public forums will be held on Wednesday, Sept. 2, in Washington, D.C., and feature a panel of federal and state officials, moderated by IRS Commissioner Doug Shulman.”

The panel will include representatives from the Treasury Inspector General for Tax Administration (TIGTA) and the U.S. Government Accountability Office (GAO). Representatives from the states of California, Maryland, Oregon and New York will also participate on the panel.

Shulman announced a far-reaching review of paid preparers on June 4 to produce a comprehensive set of recommendations by the end of this year to boost taxpayer compliance and strengthen industry standards.

“This is the next important step in our open dialogue with interested parties in this effort,” Shulman said. “I’m very pleased with the quality of the feedback we’ve received so far. I’m confident these forums will ensure that all ideas are on the table when it’s time to form our recommendations.”

The forum will convene at 9 a.m. ET in the IRS Headquarters at 1111 Constitution Ave. NW, Washington, DC 20224. Anyone interested in attending should confirm attendance by sending an e-mail message to CL.NPL.Communications@irs.gov.

The first public forum was held on July 30 in Washington, D.C., and featured a panel of consumer groups and another panel of tax professional organizations. A third forum will be held in Chicago on Sept. 30 featuring independent return preparers and software industry representatives.

Saving Money on Property Taxes in the Off Season

Now that tax season has passed, and you’ve got your tax plan for 2009 together (right?), what can you do to save money on taxes? Take a look at your property tax bill. Some experts estimate that 60% of homes are over assessed, meaning higher property tax bills. Property owners are able to apply for reduction in assessment from July 2 – September 15. And the reassessment process can be lengthy, so this is the time to start the process.

First things first, go over your own property tax assessment with a fine tooth-comb. Those records are available at your county assessor’s office. Make sure the square footage, number of bedrooms, bathrooms, etc., is correct. If everything lines up, then review your neighbors’ assessments. Don’t worry—it is all a matter of public record, so you are not invading anyone’s privacy. Review at least 5 neighbors’ records. Your assessment should be within 10% of the average.

If your assessment record is correct, and your assessment is comparable to your neighbors’, then you can argue that the property values have fallen, so you should be taxed at lower rates. Of course, this route involves an administrative review and possibly judicial hearings. Either way lengthens the timeline and can incur additional costs. However, reducing your property taxes can save you money for years to come.

Congratulations! Tax Season is OVER!

Whew! You made it past April 15. Time to relax and ignore your taxes until next year, right? WRONG!

Tax planning is a year round endeavor, at least it should be. Here are just a few things you should be doing now to help you keep more money in your pocket, and less in the IRS coffers.

Get Organized!

While all your tax files are still handy, take the time to organize them. Create files for: Income, Medical, Donations, Real Estate, Child Care, Tax Correspondence, Student Loans, Miscellaneous Receipts, Tax Payments, and Archived Tax Documents. And keep the files handy. If it is easier to put receipts and documents in files as throwing them in a pile on the kitchen counter, you might actually still have that receipt next year. Another helpful tip: write down what the expenditure was for, the dates and who was involved, and attach it to the actual receipt. You probably won’t remember every single deductible expense a year from now, so make a note and ensure you get every deduction you’ve got coming to you.
Change Withholdings

Did you get a fat refund this year? Then you may want to adjust your withholdings. I know getting a big check from the government feels good, but wouldn’t that money be more useful to you all year long? With the average refund running around $2,500 that’s $200 a month you could keep in your pocket! Stop giving the government an interest free loan while you struggle to make ends meet. On the other hand, if you found yourself with a big tax bill, consider increasing the amount withheld from your paychecks. Remember that we’re aiming for the “Goldilocks” principal: not too much, not too little, but just right.
Get Educated!

Most people are missing out on deductions and credits they are entitled to, all because they don’t know any better. Americans are so terrified of taxes because they don’t actually know that much about them. Pick up a book, peruse the IRS website, or take a class. By taking some initiative, and learning more you are becoming a better steward of your family’s finances. If that’s not enough to convince you remember, increasing your tax knowledge can save you money!

I promise next tax season will be much easier if you do just these few simple things.

After Busy Season, Accountants Get a Well-Deserved Tax Break

The Dallas news wrote up a great article on how those of us working in the tax industry get to finally take a sigh of relief, now that tax season is over. You can find a snippet of the post below, but the full story can be read here.

As we breathe a sigh of relief now that we finally filed our taxes, another group is also breathing easier:

The accountants and tax preparers who have worked all-nighters and weekends and skipped family functions to process the endless piles of tax returns.

For them, tax time is taxing.

Today, many are sleeping in, hung over or jetting off on vacation.

Before April 16, never ask accountants how they're doing, James A. Smith advises.

But today is a different story, a fresh start for tax preparers across the land who've scanned hundreds, if not thousands, of returns.

"You suddenly feel a little bit lighter," said Smith, a certified public accountant in Dallas. "Even though you're exhausted, you can breathe this big, deep breath and let it out there and let go of the stress and tension.

"You don't feel you weigh as much as you did five minutes ago."

Across the country, firms organize celebratory buffets, picnics and cocktail parties for their employees for a job well done and to mark the end of the so-called busy season.

Tax preparers polled by the National Association of Tax Professionals said they often take it easy for a couple of days after April 15.

One firm closes down at noon and employees rent a limo and go out for lunch. Many go on vacation, although one tax preparer said she takes a break before tax season so she can remember the beach when she's working late at night.

Last night, employees at Sibley & Co. in Dallas were planning to head out for hamburgers.

The firm will be closed today and Friday to help employees recover. They are "just flat tired," said Ken Sibley, the firm's founder. He's taking his wife to Florida for a week – and he plans to sleep on the plane.

"We have been working an average of 12 to 15 hours a day for six days a week and a lot more than I would want to on Sundays," Sibley said. "It's just been very, very intense."

During Tom Ochsenschlager's first tax season, a manager described the process as running an "intellectual marathon."

Tax Season -- Great Reminder to Consult with Professionals.

After sending out a few copies of my new book to fellow bloggers and tax professionals, Jennifer Sawday, of California Estate Planning Blog, posted an entry on her blog about the book and about seeking professional help with taxes. Thanks, Jennifer!

Tax season has fully descended upon all Americans. (Also, Girl Scout cookies as well. Girl Scout cookies are much more palatable!)

I received a complimentary copy of Roni Lynn Deutch's book, The Tax Lady's Guide to Beating the IRS and Saving Big Bucks on Your Taxes… It's a great book and very easy to read. Reading books like Roni's makes you aware of the value of hiring a tax professional to assist you with your taxes, tax planning and representation in case of an audit or other issues involving the IRS or local tax authorities. It also brings home the point that you should consider consulting with and later hiring a professional to assist you with other endeavors as well.

Be sure to do your homework on any important issue facing your family whether it be taxes, estate planning, financial advice and other such matters. Do your reading, Internet research and then consult with professionals as well to make sure you are taking the right steps to protect yourself and your loved ones.

When you decide to consult with a professional, ask at the outset if there will be a consultation fee and how much so you can be prepared. Some professionals do not charge a fee, will waive the fee or have reasonable fee depending on the nature of the consultation. Professionals have nothing to give you other than their time and with their time comes their knowledge, insight and wisdom that is often invaluable.

Receiving Roni's book and reading it reminded me to share this important point with our blog readers.

How to Reduce Stress this Tax Season

With all the organizing, filing, writing, researching, and calculating involved, many Americans find themselves over stressed every year over their tax returns. Tax season has always been a stressful time, but with the current economic situation, some people are getting stressed to the point of exhaustion. However, there are several steps you can take to reduce your stress this tax season, and still file with plenty of time to spare.

1. The early bird...

Once tax season begins, it is never too early to get started on organizing and filling out your tax documents. Hopefully you saved most of your tax records from last year, so that you can just copy the information from it. But even if you do not, it is always a good idea to get an early start on your tax returns. If you wait until too close to the deadline then you will find yourself overstressed trying to get everything taken care of before the cutoff.

2. Enlist a friend... or two

While most people prefer to handle their financial business solo, having a spouse, close friend, or family member around to help with your taxes can be helpful. Just because they’re around does not mean you need to share specific numbers. Rather, you can have them for support or answering simple tax questions. Trying to figure something out on your own can be difficult, and having the help of someone you trust can make the problem solving less difficult.

3. Read up on tax help

If taxes are confusing to you, it may just be due to a limited amount of knowledge about taxes. When it comes to tax returns, the more you know about the topic in general, the easier it will be for you to complete. There are dozens of articles, blogs, and even books dedicated to educating you on taxes and how to work the system to benefit your particular situation. I even penned a comprehensive book on the topic, which you can check out at TaxLadyBook.com.

4. Put aside time

If you are the type of person who just likes to sit down and get a job done, be sure to set aside enough time for this important task. It can take hours to fill out and compile some trickier returns, so be sure to give you’re a healthy chunk of time, preferably a weekend when you know you will have time.

5. Ask around at work

Since the bulk of taxes revolve around your income taxes, it only makes since that asking around at the work place would be a good source for tax knowledge. You can ask specific coworkers about their tax returns, or even ask around at lunch to see if any one has finished their taxes yet this year and what they think. You may be surprised to see how many of your coworkers are willing to help!

6. Treat yourself... occasionally

Before you start on your tax returns, it is a good idea to make a few "stopping points", where you can take a break from working on your taxes and reward your self. Maybe pick up a box of your favorite cookies, or just have a new episode of your favorite show up and ready to watch for a nice little break. The idea is to reduce your stress and take the task slowly, so you do not rush through and make costly mistakes.

7. Update your tax knowledge

No matter how much you claim to know about last year’s taxes, there are always new updates to the United States tax code. Be sure to check the IRS website every year for information on new credits, deductions and rules. You may also find that some of your favorite credits or deductions have expired, which can help you avoid costly mistakes.

8. Remain Vigilant

In this economy, owing the IRS more than you expected can be quite a set-off. A lot of people stay ahead of the game by keeping money to pay taxes in a separate savings account. Make sure you remain vigilant with adjusting your withholdings or making your estimated tax payments throughout the year. If you still unexpectedly find yourself owing then you should probably meet with a tax professional.

9. Better Safe than Sorry

If you feel unsure about your return, take it to a professional to review. If you feel you may be taking too risky of a position in claiming a deduction or that you missed a credit or two, you might as well have a professional take a peek and/or a whack at it. Remember, the tax preparation fees may be deductible next year when preparing your return, so what are you waiting for?

10. Save everything for next year

Saving your tax documents and making copies of everything (especially your completed return) will help you a lot next tax season. If done correctly, next year all you need to do is look up updated tax codes and change the numbers.

Tax Scandals Of The Rich and Famous

Tax season is here, and so are new tax scandals. Boston.com recently posted a timeline with pictures about tax scandals of both the past and present. You can find clips from the time line below, but be sure to check out the full post here.

Tax season is here again, along with the stress of calculations, forms, and deadlines. Need some inspiration as you keep the IRS at bay, or maybe just a reminder that things could be worse?

Here are a few celebrities whose tax woes could serve as a guide -- of what not to do.

Timothy Geithner

The treasury secretary hasn't even played by IRS rules. Geithner failed to pay $34,000 in self-employment taxes, including Social Security and Medicare taxes between 2001 and 2004. Geithner contended the mistakes weren't intentional, but that he should have known better.

Tom Daschle

Daschle had to withdraw his nomination for health and human services secretary once he was accused of failing to pay more than $128,000 in taxes. The back taxes involved unreported consulting fees, questionable charitable contributions, and failure to pay taxes on the use of a limousine and driver, according to a "confidential draft" report prepared by Senate Finance Committee staff.

Helio Castroneves

The racecar driver and "Dancing with the Stars" winner was accused of hiding about $5.5 million in income from the IRS in October. His sister Katiucia and attorney Alan Miller were also charged. Castroneves's trial is set to take place in March.

As Tax Season Continues, Beware of Scams

From The Washington Post:

As sure as the taxman cometh each year, so do the scam artists.

The Internal Revenue Service is warning U.S. taxpayers to be prepared for a steady increase in scams and virus attacks via e-mail, telephone and the Web as the April 15 tax-filing deadline approaches.

"We see a big upswing in complaints about these phishing emails January through April during the tax filing season," IRS spokeswoman Nancy Mathis said.

The most common type of scam arrives via e-mails claiming to come from the IRS or Treasury Department. They typically try to either scare consumers into thinking there is an error with their tax filing, or that they are eligible for a tax rebate or benefit from the government economic stimulus package that just passed on Capitol Hill.

These so-called "phishing" e-mails typically arrive in an e-mail that urges users to visit a site, which in turn prompts visitors to enter their personal and financial data, information that is then sent off to identity thieves.

Regardless of the type of come-on used in these scams, the IRS wants taxpayer to hear one message loud and clear:

"The Internal Revenue Service does not communicate with taxpayers via unsolicited e-mail," said J. Russell George, treasury inspector general for tax administration. "Some of these bogus e-mails are so sophisticated that people who are uninformed can and do fall prey to this type of scam. That is why it is so imperative that we continue to get this message out to people."

On Feb. 6, the U.S. Computer Emergency Readiness Team (US-CERT), warned Americans about a phishing scam that spoofed the IRS, offering recipients stimulus package payments. These e-mails include text that attempts to convince users to follow a link to a Web site or to complete an attached document.

These types of attacks, which prompt people to click on e-mailed links and download documents, also are frequently attempts to install malicious software that steals sensitive and financial information from infected systems, the government warns.

Since 2005, George's office has received nearly 2,000 complaints about phishing, and it estimates that at least 11,000 taxpayers have been victimized by these scams to date.

Income Taxes: What You Need to Know

From the New York Times:

When it comes to income taxes, there are different types of people.

There are individuals who find pleasure in tackling the 1040 all on their own. At the other end of the spectrum, there are people who make a mad dash for the nearest H&R Block about 9 p.m. on April 15.

But no matter where you fall on that scale, it’s important to master the basics. Most of life’s milestones carry some sort of tax implication, whether it’s having a child, purchasing a home, changing jobs or, yes, even dying. And as you travel through life and your situation evolves, your approach to income taxes needs to be adjusted accordingly.

To complicate matters, the rulebook is constantly changing. So taxpayers must sort through a befuddling mix of new rules, deductions and credits each year. For some people, all of the noise is justification enough to pay an accountant.

Even if you do, there is still a variety of issues you should be aware of that will help you maximize your tax savings. This guide will explain how income taxes work and how to trim your bill, and offer a few approaches to tax preparation.