Prevent Tax Return Fraud: How to Protect Your Identity
More than 3 million tax returns are hacked each year, according to the IRS, and billions of dollars are erroneously given out each year due to fraud. But it doesn’t stop there. Once the thieves have your information, they can use it to steal your identity and then use your financial resources. There is still no surefire way to prevent tax return fraud altogether, but there are a number of ways to protect your identity to ensure you don’t become a victim.
How to Prevent Tax Return Fraud
1. Educate yourself about the latest scams, as well as the ones that have been around for a while. One common scam, for example, is when someone calls your home pretending to be from the IRS; the IRS, however, does not make such calls to request personal information.
For specific scams that happen to be rampant in your area, your local police department may be able to provide you with details about how you can protect yourself from them.
2. Do not give your Social Security Number to anyone you do not trust. Do not carry your Social Security Card or Number with you unless you need it.
3. Only choose reputable accountants or attorneys when you file your tax returns. Ask your friends or family for references, and research the reviews about each potential accountant online.
4. Be vigilant when it comes to your passwords. Change your passwords frequently, and do not use passwords that can be easily guessed, like the names of your pets. Use passwords that contain a variety of numbers, letters, and symbols. Do not use the same password for multiple sites.
5. Review your Social Security earnings, your bank statements, and your credit report regularly to catch any discrepancies. You can receive your credit report for free through annualcreditreport.com, which includes reports from each credit company. As you review your credit report, consider obtaining your credit score as well, as a significant decrease in your score could mean someone else is posing as you.
6. Help prevent tax return fraud by filing your tax return early, hopefully before thieves get a hold of your account.
7. Get an IRS protection pin, which your accountant can help you set up.
What to Do if You Become a Victim of Identity Theft
Most often, people learn that they have become victims of tax return fraud when they are unable to file their returns. Instead, they are informed electronically or through their accountants that their return has already been filed.
If you do become a victim, inform your local police department and the Federal Trade Commission. You also may call the Identity Theft Hotline at 877-438-4338. You also should contact the IRS and complete an Identity Theft Affidavit.
Next, inform your credit card companies, bank, and credit reporting agencies that you have been a victim of fraud, and close any of your accounts that might have been compromised.