Sure, not many people would say no to a shot at a bigger tax refund. But the Internal Revenue Service is warning about phony tax tips, oddball tax credits and other scams that will trigger trouble with your taxes.
Instead of a quick rush of more refund cash, you'll likely wait much longer than you'd expect for any legitimate tax refund that you're likely owed.
Why the IRS is warning about Form 2439 scams
What's new this year: The IRS is seeing an uptick in overstated or fabricated claims tied to undistributed long-term capital gains claims via Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains.
This form, which looks vaguely like other documents that report income, gives shareholders of certain investment funds or real estate trusts a way to claim a refundable credit for taxes paid on undistributed capital gains.
This year, the IRS reported that it has identified schemes where claims regarding undistributed long-term gains are overstated or totally fabricated. Sometimes the undistributed capital gains claims are connected to organizations that are not even legitimate investment funds or real estate trusts.
But the IRS has also seen fake claims that are falsely linked to real, well-known organizations. "Improper claims may result in refund delays, audits, penalties, or enforcement action," the IRS warns.
Average refund is up – so are viral tax hacks
So far this year, the average federal income tax refund is $3,742 through Feb. 27, according to data released March 6.
That's up 10.6% from the average of $3,382 for the same time frame a year ago. On average, taxpayers received an extra $360 so far this tax season versus the same time last year.
The IRS has received nearly 51.5 million income tax returns, down 1.7%.
The IRS has issued nearly $136.6 billion in tax refunds, up 9.4%.
Plenty of legitimate new targeted tax deductions exist on 2025 federal income tax returns that might reduce your tax bill or drive up your tax refund – the new enhanced deduction for adults age 65 and older, a tax deduction on tip income, a tax deduction on new car loans for cars and trucks with final assembly in the United States, and a tax deduction on qualifying overtime pay earned in 2025.
Yet every year, the IRS alerts us to wild claims being made on social media and elsewhere about flighty tax strategies that will come back to bite you.
