Tax Season Brings Out the Wild Emails
Feb 24 2010
Every tax season the email scammers take flight.
Phishing. The most common form of scam is called phishing (fishing). These are emails that look like official IRS correspondence and direct you to either take an action off the email or route you to an artificial IRS web site. The objective is collecting your personal information. Don’t be fooled. The IRS does not email anyone. For details of known tax scams check out this real IRS site.
“Net Disability Exclusion.” Lately we have seen and heard about an email floating around that explains how you can recalculate your taxes to gain additional tax benefits from tax-free disability payments. The subject of the email is about the “Net Disability Exclusion” for military retired pay. We highly suggest you consult with a tax attorney, CPA or other tax specialist before you try this procedure.
While we are not tax specialists here at MOAA, we have researched this “Net Disability Exclusion” and believe the procedure to be a misinterpretation of the tax code. We found a letter from the IRS detailing this procedure and how the IRS finds it questionable. From our review, the procedure appears to either claim a tax benefit for a disability twice or seeks to claim a tax benefit for a Service rated disability the member doesn’t have. In the later case, these are typically people who have a VA rating but not a Service rating. Be careful.
And the letter is dated eleven years ago… as anyone who follows ‘Scopes.com’ knows, some scams never die.
Of course, the other problem is clearly demonstrated by the IRS letter itself. I am not uneducated– I’ve earned a Master’s and a Doctorate– but by the time I’d read half the thing I was cross-eyed. Tax law is written to be read only by other lawyers, and tax forms are designed require a tax accountant to fill out, because they’re all predicated on polysyllabic obfuscation.
[In the spirit of trying to find *something* positive, I suppose that a simplified tax code-- one which could be read and understood by actual taxpayers-- would increase unemployment amongst accountants, tax attorneys and CPAs, who would then file for unemployment benefits, thus raising our taxes.]
I have researched the disability tax exclusion and H.R. Block says it is legit. I went to two more tax prepares and they said the same thing.
Larry – I had the same result through my tax accountant and received quite a bit of money back. THe letter MOAA attached to this article above is clear as day, and so is the tax code. Bottom line though – I received quite a bit of money back…and it was nice.