Tax Identity Theft: Tips and Tricks To Stay Secure

04/05/2017 10:31 am ET

Every year, tax-related crimes affect millions of Americans. These crimes usually involve thieves stealing Social Security numbers (SSN) to file fraudulent tax returns and receive cash refunds. In many cases, the victims discover what’s happened after the IRS rejects their claim. Even if you’re not due a return this tax season, you can still become a victim of tax identity theft.

Though the IRS is working to crack down on identity theft and tax refund fraud, it’s reported there were more than 42,000 fraudulent tax returns for 2015. Those returns amounted to a staggering $227 million claimed in fraudulent refunds. While no one is immune to tax-related fraud, there are several easy steps you can take to minimize your risk.

File Early

During tax season, remember the adage, “the early bird catches the worm.” By the second or third week in January, most employers will send out tax forms. As soon as your state and federal taxes are available, go ahead and file them. Businesses send tax documents via mail, often with “tax documents enclosed” printed on the envelope and this can be an attractive target for identity thieves. By using a mailbox that locks or checking your mail regularly, you can help ensure your forms don’t get into the wrong hands.

Beware of Scams

Phishing and malware scams are prevalent methods of obtaining information. During last year’s tax season, the IRS experienced a 400 percent increase in these incidents. Scammers will either call or email potential victims pretending to be someone from the IRS or a tax company. They’ll ask for personally identifiable information, including SSN, date of birth, and even credit card information. Don’t fall for these scams – the IRS will never reach out to taxpayers via email, text, or social media. If you believe you’ve come across a scam like this, report it directly to the IRS.

Safeguard your SSN

Tax-related identity theft occurs when someone uses your SSN to file a fraudulent tax return. Take great care to keep your SSN safe. Don’t give it out to businesses just because they ask for it, make sure that it’s required to complete your transaction. Be sure to shred any documents – such as a tax document, receipt, or bank statement – that include your SSN, unless it’s necessary to keep. Keep your Social Security card in a safe place and avoid carrying it around with you.

If you suspect your SSN has been compromised or you are a victim of identity theft, notify one of the three major bureaus to place a fraud alert on your credit files. It’s also a good idea complete an IRS Form 14039 Identity Theft Affidavit, which will alert the IRS to the threat. Check out the IRS’s data breach page to learn more.

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