And please use a 'trusted' tax preparer
The Internal Revenue Service (IRS) has its hands full with scams it continues to see that are misleading taxpayers into filing inappropriate claims for tax credits.
Theres the Fuel Tax Credit, the Sick and Family Leave Credit, and household employment taxes scams all fueled by misleading social media advice and promoters.
Now, the agency is alerting taxpayers about a new scam making the rounds one about clean energy tax credits under the Inflation Reduction Act (IRA), an initiative launched by the White House two years ago.
And these arent your dime-a-dozen scammers sitting in a boiler room somewhere in India, but rather unscrupulous tax preparers who are putting their own spin on the rules for claiming these credits.
Most of the ones that the agency is catching are tied to Form 1040 and claimclean energy credits that don't apply to the taxpayer's income sources, like wages or retirement income.
The catch
Yes, the IRA allows buying clean energy tax credits from certain investments to lower your tax bill. However, the IRS is seeing tax returns where people claim credits they can't actually use, and thats the catch.
These purchased credits can only offset income tax from "passive activities" like rental properties. Most taxpayers don't have passive income, so this scam is basically selling them useless credits.
"Scammers exploit tax law complexity to trick people into claiming credits they don't deserve," said IRS Commissioner Danny Werfel. "Be cautious of anyone pushing these schemes. Use a reputable tax professional for complex credits like clean energy."
Where youll get into hot water
Like it or not, if you claim these inappropriate credits, the IRS can penalize you, including requiring you to repaythe claimed credit amount with interest.
If youre considering purchasing clean energy credits under the IRA and want to avoid the IRS giving you the stink eye, you should consult a trusted tax professional for advice on whether you are eligible to purchase credits and claim the tax benefits. Additionally, you should be aware of how your particular tax circumstances may be affected by the passive activity rules.
For more information on clean energy credits, visit the Inflation Reduction Act page on IRS.gov.
Photo Credit: Consumer Affairs News Department Images
Posted: 2024-07-05 10:56:37
