Why Gen Z is getting hit hardest by tax scams

Why Gen Z is getting hit hardest by tax scams

Historically, the typical victim of a tax scam has tended to be older and less technologically savvy than younger adults. But recently, a different pattern is emerging, in which younger adults are increasingly more susceptible. A January 2026 McAfee survey of 3,008 adults aged 18 years and older in the United States highlights this new trend. The study found that nearly one quarter (23%) of all surveyed American adults said they'd fallen for a tax scam. But 42% of 18- to 24-year-olds said they'd fallen for a tax scam, which was the highest rate across age groups.

Inflated confidence among younger adults can make them more susceptible to tax fraud. Among 18- to 24-year-olds surveyed in the McAfee study, 42% said they'd feel very confident spotting a deepfake tax scam, as compared to only 15% of 65- to 74-year-olds. However, the findings highlighted the fact that focusing only on confidence about avoiding tax scams might be misleading, because it doesn't consider exposure to tax scams. In this same study, for example, 23% of 18- to 45-year-olds reported experiencing tax-related identity theft, as compared to only 5% of adults ages 55 years and older. In short, heightened confidence about one's ability to avoid tax scams doesn't necessarily mean one won't fall victim to one.

A lack of caution can also make younger adults more susceptible to tax fraud. The McAfee study found that younger adults use far fewer protective behaviors against tax scams than older adults. For example, 56% of 18- to 24-year-olds avoided unknown links, versus 81% of adults 65 years and older. Similarly, 45% of 18 to 24-year-olds versus 77% of adults 65 years and older ignored unknown texts or calls. Notably, 17% of 18–24-year-olds use anti-malware protection, as compared to 50% of adults 65 years and older.[

These study findings highlight a curious paradox. The generation that grew up online may be among the most vulnerable to online tax fraud. To understand why, SmartCustomer analyzed reviews across 136 tax preparation businesses, covering more than 1,000 customer reviews tied to brands such as TurboTax, H&R Block, FreeTaxUSA, and TaxAct. This analysis of reviews, along with survey findings from McAfee, Norton, the Federal Trade Commission (FTC), and the Internal Revenue Service (IRS), reveals an unsettling pattern. The same habits that can make young adults efficient online, such as tech savviness and a trust in automation, can also make them ideal targets.

The Digital-Native Blind Spot

Technological savvy and inflated confidence might make younger taxpayers act too hastily and miss red flags that signal fraud. Younger taxpayers tend to be digitally literate and comfortable solving problems quickly online. They’re used to chat-based help. They might assume that if an interface looks polished and professional, it’s probably legitimate.

Scammers capitalize on this blind spot among adults raised with technology. Tax fraud no longer relies on clumsy emails filled with typos and vague threats. In 2026, the scam ecosystem appears legitimate and user-friendly. It might seem to offer helpful customer support and the convenience of AI assistants. Without slowing down to check whether a site is legitimate, a hasty user might be lured into using a fraudulent site.

An Overreliance on AI

Increasingly, Americans are turning to AI to help them with their taxes. For example, a March 2026 Norton survey found that 23% of Americans planned to use AI tools to help prepare their taxes. Of this group, 41% said they would be comfortable letting AI file their taxes. Notably, far more younger people planned to use AI-assisted filing: 32% of Gen Z and 38% of Millennials said they planned to use AI versus only 17% of Gen X and 5% of Baby Boomers.

This level of trust in AI has opened up new channels for scammers to commit fraud. Norton found that 23% of scam encounters involved fake AI chatbots posing as tax help, while 21% of victims encountered fake links generated by AI chatbots or search engine summaries. These scams work because they’re conversational and polished. They’re also designed to blend seamlessly into the tools people already use.

The threat worsens daily. For example, McAfee Labs identified 1,468 malicious tax-themed domains between September 2025 and February 2026 — an average of 43 new fake tax websites added every day. Gen Digital, Norton’s parent company, has described this new wave as “VibeScams.” VibeScams are AI-generated fraudulent sites that require little human effort but look credible enough to fool even experienced internet users.

Search First, Verify Later

For young adults, search engines and social platforms are often the first stop for financial advice, given their ease and familiarity. In fact, Norton’s survey data found that 33% of young adults planned to use search engines for tax help, while 24% said they would turn to social media.

The IRS's 2026 Dirty Dozen list specifically warned taxpayers about misleading tax advice on social media, identifying it as one of the year's top scam threats. The agency also identified more than 600 social media accounts impersonating the IRS during fiscal year 2025.

A first-time filer who searches for free help on the internet or watches a viral video with helpful hints may think they’re being resourceful. But in reality, they may fall prey to scammers who exploit those habits.

The Rush Is Part of the Scam

Tax scams often work because people are busy or preoccupied and act hastily. A recent McAfee report provides an example of this phenomenon. John C., a 36-year-old mechanical engineer and Ph.D. student, received a convincing phone call claiming he had an IRS issue. Given the many responsibilities he was juggling, he acted hastily to resolve the problem quickly. Only after paying did he realize the charge was international and the whole interaction had been fraudulent. In retrospect, he described the scam as “absolutely masterful.” Unfortunately, today’s most effective scams, which weaponize urgency and capitalize on impulsive action, are indeed masterful.

What the Reviews Show Up Close

National survey data explains the scale and scope of tax fraud, while customer reviews provide a sense of what it feels like to be the victim of tax fraud. Across SmartCustomer's review analysis of tax preparation and tax relief companies, three patterns appeared repeatedly. Together, these patterns provide a sense of how modern tax fraud works — and the costly gray area between negligence and outright deception and abuse.

1. The Refund Mirage

The first pattern is essentially a refund mirage. Fraudsters promise a significant refund that requires minimal effort on the consumer’s part. They pressure consumers into hasty decisions and might use the promise of large refunds to justify their high fees. But once payment is processed, circumstances quickly change. Suddenly, that promised refund decreases, and explanations become vague. For example, one reviewer described being lured in by a low-cost filing offer, only to end up with multiple unexpected debits totaling close to $3,000.

This pattern aligns with McAfee’s 2026 study. According to the survey findings, 38% of Americans say they’d been asked to click a link or send payment related to a supposed tax issue, and among those who have fallen for a tax scam, the average reported loss is $1,020. In short, any service that confidently guarantees a large refund before carefully reviewing the taxpayer’s records should be treated with extreme skepticism.

2. Ghost preparers

Another recurring pattern is a rise in "ghost preparers", or fraudsters who ghost customers after payment. Customers describe paying thousands of dollars in upfront fees for tax preparation or tax relief help, only to find that communication stops abruptly once the payment clears or the refund window closes. Suddenly, customer support is unresponsive. A ghost preparer might prepare a tax return for payment, but then fail to sign the return as the paid tax preparer. If the return contains fraudulent claims or errors, the taxpayer, not the tax preparer, is the one held legally responsible for the information on the return. In some cases, the fraudster is caught. For example, in 2025, a ghost tax preparer in Georgia was sentenced to prison for preparing returns without disclosing that she was the paid preparer. She adjusted income and deductions, claimed false credits, and failed to provide copies of the returns she filed for clients.

But this pattern is increasingly harder to fight because some companies hide behind automated customer service systems that never resolve problems. Norton researchers have described this kind of barrier as a "resolution wall", which is a support structure that tends to exhaust customers far more than help them. In this type of pattern, the red flag is a request for a large, upfront payment without a clear work plan or timeline.

3. Identity and personal data theft

The third pattern involves identity and personal data theft. Reviewers repeatedly warned about phony IRS-style websites and unofficial tax portals that appear designed mainly to collect Social Security numbers, birth dates, addresses, 1099 forms, and bank details. Once that information is provided, the damage can continue long after tax season ends. Some users reported waves of spam calls and emails after interacting with questionable tax companies. Others described deceptive sites charging for services that the government provides for free.

Studies confirm those fears. McAfee found that scam attempts commonly ask for SSNs, birth dates, home addresses, and banking information. The IRS reported more than 600 IRS impersonation accounts on social media in fiscal year 2025. And the National Taxpayer Advocate has acknowledged that hundreds of thousands of identity theft cases remained unresolved going into 2026.

This pattern underscores how tax scams can be uniquely destructive, because the loss isn’t always immediate or obvious. Sometimes taxpayers might not find out until months later, when they discover someone else has already filed a return in their name.

Why 2026 Feels Especially Risky

The recent discontinuation of the IRS’s Direct File program provides yet another destabilizing factor for taxpayers. When the federal government’s own free filing option ended in 2025, many taxpayers were ushered back into the broader commercial marketplace. Norton’s study found that 27% of affected taxpayers planned to switch to another free filing service and 48% expected to use third-party software.

This change means that millions of people — many of them young or first-time filers — are now searching for alternatives online. And they are doing so in an environment in which dozens of new fake tax-themed domains are created every day. The result is a perfect storm of risk, which involves inexperienced filers relying heavily on search and AI tools and scammers preying on those very tendencies.

How to Protect Yourself Before You File

Regardless of a consumer’s age or comfort level with technology, the most important precautions against tax fraud are caution and vigilance. Before filing, review this checklist.

• Check independent reviews. Don't rely solely on testimonials hosted on a company's own website. Look for consistent feedback on independent platforms and pay attention to complaints about such negative experiences as surprise fees or misleading refund promises.
• Be wary of refund guarantees. Legitimate preparers don't promise substantial refunds before reviewing documentation in detail.
• Avoid percentage-based refund fees. Charging by form or complexity is standard. Charging a percentage of the refund incentivizes scammers to inflate estimated refunds.
• Confirm professional credentials. Legitimate tax preparers are required to have a Preparer Tax Identification Number, or PTIN.
• Ensure that the tax preparer signs the return. Be cautious of anyone who prepares a return but refuses to sign it.
• Pay attention to the support structure. If a company routes every meaningful question to an AI chatbot and makes it hard to reach a human before payment, expect an even worse experience after payment.
• Treat social media tax hacks with suspicion. A viral post isn't tax guidance. The IRS reports that misleading tax advice online is a significant fraud threat.
• Use a credit card when possible. Credit cards generally offer stronger dispute protections than debit cards or payment apps. And no legitimate IRS representative will demand gift cards, wire transfers, or cryptocurrency.
• File early. The sooner a legitimate return is filed, the less opportunity there is for someone else to file fraudulently first.

The New Tax-Season Reality

Assuming that digital natives are inherently safe from scams can be both inaccurate and dangerous. Young adults might approach tax season with an abundance of confidence and comfort with digital tools. But in an environment with an increasing number of convincing but fake websites, chatbot impersonators, and misinformation amplified and tailored by algorithms, they can easily fall prey to fraud.

The national data from McAfee, Norton, the FTC, and the IRS shows the scale of the threat. Consumer reviews highlight the personal experiences and consequences of fraud. Together, they point to the same conclusion: in 2026, the taxpayers who are most tech savvy may also be the ones most vulnerable to the internet’s most sophisticated forms of tax fraud.

References

This story is based on SmartCustomer’s Consumer Team’s April 2026 internal analysis of 136 tax preparation businesses and more than 1,000 customer reviews, as well as multiple external data sources referenced in the story.

This story was produced by SmartCustomer and reviewed and distributed by Stacker.