Are you looking forward to getting your tax refund in the New Year? Tax identity thieves may be looking forward to getting your refund too. That’s why the Federal Trade Commission has designated January 29-February 2, 2018 as Tax Identity Theft Awareness Week.
Tax identity theft happens when someone uses your Social Security number (SSN) to get a tax refund or a job. You might find out it’s happened when you e-file your tax return and discover that a return already has been filed using your SSN. Or, the IRS may send you a letter saying more than one return was filed in your name, or that IRS records show you have wages from an employer you don’t know.
Learn to protect yourself from tax identity theft and IRS imposter scams, and what to do if someone you know becomes a victim. The FTC and partners including the IRS, the Department of Veterans Affairs, and the Treasury Inspector General for Tax Administration will be co-hosting free webinars and Twitter chats during Tax Identity Theft Awareness Week. Visit ftc.gov/taxidtheft for details about the events and how to participate.
For more information, click here.
- Ask students if filing early may avoid e-file tax identity theft fraud if someone files before they do.
- Ask students what steps should they take if their identity is stolen?
- How can one protect from tax identity theft and IRS imposter scams?
- What can you do if you or someone else you know becomes a victim of identity theft?
The average federal income refund for this year was nearly $2,900, resulting in tens of billions of dollars ready for use. Instead of spending those funds, financial advisors recommend saving for an emergency fund, retirement, or other household goals. Currently, these refunds represent an amount larger than the average annual personal savings rate of most Americans. Spending the refund on things you don’t need often results in reduced future financial security.
Also, consider reducing your withholding throughout the year. The refund you receive is only getting back money you lent the government over the past year at zero per cent interest. Instead, have an automatic withdrawal sent to your savings each month.
For additional information on saving your tax refund, click here.
- Have students conduct a survey of people to determine how tax refunds are used..
- Have students prepare an analysis of lost interest/earnings by taxpayers who received a large refund each year.
- What are the benefits of receiving a large tax refund?
- What are the drawbacks of receiving a large tax refund?
A month into the 2014 tax filing season, the IRS said the average tax refund is up 3 percent to $3,034.
This article also reports that more taxpayers are completing their own returns as opposed to using the services provided by tax professionals and filing their returns earlier this year when compared to 2013. Already, the IRS has received nearly 40 percent of expected total returns during the first month of the filing season.
Finally, recent surveys indicate most Americans plan to use their tax refund to pay down debt, for shopping, or for entertainment.
For additional information, go to http://www.usatoday.com/story/money/personalfinance/2014/03/06/irs-tax-refunds-returns/6125597/
1. Assume you just received a $3,000 tax refund. How would you use the money?
2. If you received a $3,000 refund this year, what effect would it have on your tax planning for next year?
You may want to use the information in this blog post and the original article to discuss
- If students should use a tax refund to pay down debt, start an investment program, or spend the refund.
- Time Value of Money examples to show how a refund that is saved or invested can increase in value.