Avoid Tax-Related ID Theft This Tax Season

Identity thieves are hard at work year-round, but they’re especially active during tax season. Take preventative measures at tax time to minimize risk.

Filing your taxes should be straightforward – but it can become complicated when personal information falls into the wrong hands. Tax-related identity theft happens when someone uses your Social Security number or other personal details to file a fraudulent tax return in your name, often without immediate warning signs.

Many people don’t realize it’s occurred until their return is rejected, or they receive an unexpected notice from the Internal Revenue Service (IRS). Understanding how this type of identity theft is carried out and how to protect yourself can help you file with confidence, avoiding unnecessary delays and stress.

How Tax-Related Identity Theft Happens

Scammers employ a range of tactics to obtain the information they need, including phishing emails or text messages that appear to originate from the IRS, fake tax-preparer schemes, data breaches, and even stolen mail. Once they have your information, they can file a fraudulent return, redirect refunds, or create problems with your tax record that take time to resolve.

Because tax fraud often happens quietly, awareness is one of your strongest defenses.

7 Steps You Can Take To Protect Yourself

Protecting yourself from tax-related identity theft doesn’t require complex steps – just a few proactive habits that help safeguard your personal and financial information. These actions can significantly reduce your risk before, during, and after you file your taxes.

1. Secure your personal information. Be mindful of how you store and share sensitive information – both online and offline. Keep tax documents and Social Security cards in a safe place, shred paperwork you no longer need, and think twice before sharing personal details.
2. File your tax return as early as possible. The sooner you file, the less opportunity fraudsters have to file a fraudulent return using your information.
3. Use an IRS Identity Protection PIN (IP PIN). It’s a six-digit number that helps confirm your identity when you file your return and prevents someone else from filing using your Social Security number. Any taxpayer can opt in, and once enrolled, the IP PIN must be included each year to file successfully.
4. Strengthen your digital security. Use strong, unique passwords, enable multi-factor authentication, and keep your devices and software updated to help reduce the risk of sensitive information being compromised. Also, avoid public Wi-Fi when accessing financial or tax accounts.
5. Only work with reputable tax professionals. If you use a tax preparer, choose someone you trust and verify their credentials. Legitimate tax professionals have a valid Tax Identification Number (PTIN) and will sign your return. Be cautious of anyone who promises unusually large refunds or asks to redirect your refund – these can be warning signs of fraud.
6. Watch out for IRS impersonation scams. The IRS will never initiate contact by email, text, or social media to request personal or financial information. If you receive an unexpected or urgent message claiming to be from the IRS, don’t click any links or respond. Instead, contact the IRS directly using the number on their official website to confirm whether the message is legitimate.
7. Consider e-filing your tax return. Filing electronically is faster, more secure, and decreases your risk of fraud compared with paper returns. E-filing also helps ensure your return reaches the IRS directly, minimizes errors, and allows you to track the status of your refund more easily. See if you’re eligible for the IRS Free File or save with a discount.

Red Flags To Watch Out For

Tax-related identity theft often isn’t discovered until the IRS flags an issue.

You may be at risk if:

• Your electronically filed tax return is rejected because one has already been submitted using your Social Security number.
• You receive an IRS notice asking you to verify your identity or questioning a return you didn’t file.
• You receive wage or income information for an employer you don’t recognize.
• You get unexpected emails or calls claiming to be from the IRS requesting personal or financial information.
• Your credit report shows new accounts, loans, or inquiries you didn’t initiate.
• You are contacted by someone offering to “fix” your tax return for a fee.

If any of these situations occur, it’s important to act quickly. Prompt action can limit potential financial damage and help resolve issues with the IRS faster.

What To Do If You’re Affected

If you received an official letter from the IRS indicating a suspicious return or requesting identity verification, it’s important to act swiftly. These mailed notices are often the first sign that something is wrong and include instructions to help secure your tax record.

In some cases, the IRS may ask you to complete an Identity Theft Affidavit (Form 14039) so they can begin correcting your tax record. You may also want to request an Identity Protection PIN (IP PIN), monitor your credit reports, and consider placing a fraud alert or credit freeze with the major credit bureaus.

Reporting the issue at IdentityTheft.gov can help you create a recovery plan and document the situation. While resolving tax-related identity theft can take time, taking early action can help reduce the long-term impact.

Check out this taxpayer guide to identity theft from the IRS for additional information on how you can report, prevent, and recover from tax-related identity theft.

Stay One Step Ahead This Tax Season

Regularly review your credit report for unfamiliar activity. You can request a free copy of your credit report from each of the three major credit bureaus – Experian, Equifax, and TransUnion – through annualcreditreport.com.

Checking your credit won’t hurt your credit score and can help you spot potential fraud early and give you an opportunity to ensure accurate reporting.

A+FCU Is Your Financial Partner

Tax-related identity theft can be stressful, but taking proactive steps, staying informed, paying attention to warning signs, and acting quickly if something seems off are all ways you can protect yourself – during tax season and throughout the year.

If you ever have questions about safeguarding your finances or recognizing potential fraud, A+FCU is here to help.