Tax-time identity theft is a growing problem in the U.S., and has the potential to cause you a headache and tie up your tax refund well into the summer months or beyond.
Thieves intercept personal data and file tax returns in the name of unsuspecting people who only discover the problem when their own return is rejected by the IRS. While in some cases your personal information may have been stolen long before tax season, now may be prime time for some thieves to collect names, addresses and Social Security numbers.
“Heightened awareness is necessary because all your information is on the move,” says Ken Chaplin, senior vice president for TransUnion. “It’s being sent to accountants, to tax preparers, to the IRS.”
Here’s how to keep your financial information safe and what to do if you find yourself a victim of tax-time identity theft.
5 Ways to Keep Your Tax Information Safe
You need to keep your financial information out of the wrong hands. Michael Bruemmer, vice president for consumer protection at Experian, says the steps to avoiding identity theft are simple but, unfortunately, often ignored. “A lot of our advice seems like ‘duh,’ but people aren’t following through,” Bruemmer says.
Confirm your tax preparer is legit. Review the credentials of the person who is preparing your taxes. Check with the Better Business Bureau if you’re using a local tax preparation firm, and read reviews before putting your data into an online tax service.
Don’t click on links in emails or text messages. If you’re using an online service, be wary of phishing scams that could land in your inbox. These scams use professional-looking emails to convince customers to click on links in the message and then enter their personal data. Intuit, which operates TurboTax, posts a list of known phishing scam emails in its online security center to help customers avoid being duped. However, your best bet is to never click links in emails. Instead, open a new tab in your browser and directly type in the company’s Web address to go there.
Transmit information securely. If you file your tax return electronically, you hopefully know to always use a secure network and not the free Wi-Fi at the library or coffee shop. But you also need to be careful about how you send documents to your tax preparer. “We have a lot of clients who email documents to us,” says Leslie Thompson, a certified public accountant and managing principal at Spectrum Management Group in Indianapolis, Indiana. However, if those emails aren’t encrypted, they provide a treasure trove of personal data to anyone who intercepts the message. Thompson’s advice is to password protect or encrypt all emailed documents.
Remember that the IRS uses mail for official communications. Criminals often prey on people’s worst fears, and tax-time identity thieves are no different. They may send emails or make phone calls impersonating the IRS and demanding people verify their information or make payments over the phone. However, in reality, the IRS will never email or call you unless you’ve initiated contact with them first.
Take advantage of tech features. Tax preparation services have stepped up their game in recent years to fight fraud, but many anti-theft features are only good if you use them. For example, TurboTax users can install an application that generates a six-digit “token” to make logging in more secure. Meanwhile, the company lets those with an iPhone or iPad with Touch ID technology use their fingerprint to login.
5 Things to Do if a Fraudulent Tax Return Was Filed in Your Name
In the event you discover your identity has been stolen, taking quick action may minimize the damage. Here’s how to remedy the situation.
Notify the IRS. Contact the IRS immediately and complete Form 14039 to notify them of the problem. Unfortunately, the IRS can take four to six months to investigate identity theft claims. In the meantime, you still need to file your tax forms on time and pay any amount due.
File a police report. Filing a police report creates a paper trail that may prove useful if you find someone has run up charges or committed other fraud in your name. “It is a crime, so you’ll want to treat it as such,” Chaplin says.
Consider signing up for a credit monitoring program. If you’ve been a victim of tax-time identity theft, there’s a good chance your information may be used for other forms of fraud as well. Credit monitoring programs can alert you to potential problems. In addition, they often come with other perks. For instance, Bruemmer says Experian’s program can usually resolve tax identity theft issues in four to six weeks, far less than the normal time. Over at TransUnion, members can initiate an immediate credit freeze online or via an app. Some insurance companies, such as Liberty Mutual, also offer fraud coverage and services as an add-on to their policies.
Request an identity protection PIN. For those who have been a victim of identity theft, the IRS offers an identity protection personal identification number to prevent fraud in future years. Residents of Florida, Georgia and the District of Columbia may also be able to request a PIN, even if they haven’t been victimized, as part of a pilot program.
Change your passwords. Don’t neglect to also change all your passwords, Thompson says. If an identity thief has managed to crack into one of your accounts, there is the potential for even more damage. Head off that possibility by proactively updating all your login credentials for banking, credit cards and other sensitive accounts.
Scammers use a variety of techniques to steal your personal information and use it to claim your tax refund. But you can improve the odds of keeping your tax return safe by following these steps.
More from U.S. News
10 Tax Savings Strategies for 2016
How to Reduce Your Tax Bill by Saving for Retirement
How to Save Over $1,000 on Your 2015 Tax Bill
How to Avoid Being a Victim of Tax-Time Identity Theft originally appeared on usnews.com
