Beware of Social Security Scams

With about 55 million people receiving Social Security benefits, it’s no wonder there are lots of scams aimed at separating them from that money.

Here are three big ones:

1. “We’re updating our records.”

In a common ploy, identity thieves pose as Social Security Administration employees who are making sure files are accurate. By phone, email or letter, they ask for your personal data — Social Security number, birth date, mother’s maiden name, bank account number — information that can be used to steal your identity and your money.

Social Security scams can come your way by phone, email or letter.

Reality: Legitimate SSA reps don’t contact you by email, but may reply to you by phone or letter if you’ve applied for benefits. Before providing any information, call Social Security yourself at 1-800-772-1213 (TTY: 1-800-325-0778) or visit your local SSA office to verify that the contact is real.

2. “We’ll get you a bigger check.”

Beware of anyone who offers to help you snag additional benefits for a “filing fee.”

Reality: The SSA does not charge filing fees. If you feel you’re due a higher benefit, you can file an appeal yourself, at no cost. It can be a complicated process, so you’re allowed to hire someone to help you — but you should find that person yourself. Social Security regulates what these people can charge; representatives may face prosecution if they charge more.

3. “You’ve got a special tax refund coming.”

Scammers say by filing a new income tax return, you can get a lump sum of about $3,000 to compensate you for the lack of Social Security COLA increases in the past two years.

Reality: You’ll be charged $30 or more to file new tax forms, and you’ll get no refund. But you’ll have given away a trove of personal information.

4. The Tax Refund Scam

In this scam, a Social Security recipient is told she can get help in preparing her tax return and promised she will get a refund.

This may sound innocent enough — many communities have legitimate programs like this where trained volunteers prepare taxes for low income or elderly individuals.

But in this case the taxpayer gets fleeced. Here’s what happens:

The victim is told to get the last three year’s worth of 1099 statements from Social Security. By law the Social Security Administration must provide the statements, even if they suspect a scam.

Using the statements, the scam artist prepares three years worth of tax returns for a fee. He incorrectly reports these three years of Social Security benefits, claims the standard deduction, and creates a bogus refund amount.

The taxpayer files the faulty return and sometimes receives her tax refund. But later the IRS discovers the error and the taxpayer is forced to pay the money back, along with interest and penalties.

Meanwhile the tax preparer has skipped town with the $40 to $100 fee charged for their “service.”

The Social Security Administration is warning all taxpayers requesting their 1099 statements to look out for this faulty tax preparation scam. If you have any doubts, contact a second tax professional for advice.


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