THE IRS has urged millions of Americans to avoid a specific tax form that will land you with a $5,000 fine and jail time.
Tax season can be tough for millions of Americans submitting their forms, but it is crucial that you avoid one scam in particular.
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Known as the overstated withholding scam, it wrongly encourages people to overstate on their tax returns in an effort to boost refunds, reported by the outlet Mass Live.
It tells you to falsify your actual income level and hide information from the IRS, but it has been firmly disputed as a firmly reckless and criminal activity.
The main way to do this would be to deliberately withhold on your W-2 forms, Wage and Tax Statement or other tax forms like Form 1099-NEX or 1099s.
In a statement, the IRS confirmed: “Scam artists suggest people make up large income and withholding amounts as well as the fictional employer supplying those amounts.
“Scam artists then instruct people to file the bogus tax return electronically in hopes of getting a substantial refund due to the large amount of fraudulent withholding.”
It has been said that if the IRS cannot verify your income as reported on your tax return, it will be held and further reivewd.
Claims deemed fraudulent can result in penalties of $5,000 for each copy that claims an improper credit.
Filers could even face jail time.
The US Sun has reported on this withholding scam in the past, with experts echoing the IRS’ warnings.
Tax experts have even gone as far as to say that doing this could delay your refunds.
Jackson Hewitt chief tax officer Mark Steber added: There’s usually some credibility in the claim, the credit, the deduction.
“It does exist, but not in the way they phrase it and certainly not in the way they’re intending it.
“…If you leave off the earned income credit, which about one out of five do every year, or you leave off a deduction related to your self-employment the IRS doesn’t … add back deductions, they don’t add back credits, you don’t get a bigger refund from the IRS.
“You leave it off, it stays off.”
2025 Tax Season
Tax season started on January 27 and folks must have theirs completed filed on April 15.
Those who fail to file by that time may face penalties.
However, taxpayers who need more time may file for an extension – this gives them until October 15.
The way to do this is by filling out Form 4868, the Application for Automatic Extension of Time To File U.S. Individual Income Tax Return.
This can be done by mail, online with an IRS e-filing partner, or through a tax professional.
While there’s no set schedule, the IRS revealed that taxpayers may receive refunds within 21 days of filing.
Just be sure to avoid making mistakes on any forms as that could tack on extra time.
Those filing through mail will likely get their returns within a month or could even face delays as the IRS processes millions.
As of January 31, the average refund amount totaled $1,928, per the IRS.
This is compared to the $1,395 for the same period in 2024.
The average direct deposit refund for 2025 was even higher, the IRS said, at $2,069.
To check the status of your refund, The IRS has an online tool called Where’s My Refund?
This works within 24 hours of e-filing and generally within four weeks of filing a paper return.
There are ways to make the taxpaying process less painful, like using some on the little-known IRS online tools to track your cash.
The US Sun also covered ways to make sure your refund isn’t delayed.
Refunds can sometimes be held up, but using the online tool Where’s My Refund? can help you check its status.
This can be done within 24 hours of e-filing and generally within four weeks of filing a paper return.
To do this, you will need your Social Security number or your induvial taxpayer ID number, your filing status and the refund amount calculated on your tax return.
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