5 Tips to Lower Your Risk of Tax Identity Theft

1/30/2019

Did You Know?

Tax Fraud is broadly defined as having your personal information stolen and used to commit tax-related identity-theft. This can include using your personal information to file a tax return in your name and collect the refund you had coming without your knowledge.

male computer hacker in front of computer

Over the last few years, identity fraud has become an increasingly significant concern for consumers. Based on 2018 Identity Fraud: Fraud Enters a New Era of Complexity, in 2017, there were 16.7 million victims of identity fraud. This was a record high compared to previous years. Of the types of fraud reported in 2017, employment or tax-related fraud accounted for 10% of the cases recorded.

With tax season upon us, and Tax Identity Theft Awareness Week occurring this week, there is no better time to discuss some tips on how to lower your risk of tax identity theft before it happens.

Tip #1 File your tax returns as early as possible.

Although we all know "Tax Day" is April 15th, that doesn't mean we should wait until the last minute to file our returns. Whether you decide to file them yourself using online software, or you take your documents to a professional, as soon as you have what you need for your return- file it. If you procrastinate, an identity their who may already have your personal information can use the extra time to file a fraudulent return in your name without your knowledge.

Tip #2 Protect your personal identifying information.

There are a variety of ways that scammers go about gaining access to your personal identifying information (i.e. name, social security number, address, etc.). Over time, it has become trickier to spot these scams, as they come in a variety of forms. They may try to get you to disclose information over the phone, via email or even through advertising for a software download via attachments or unsecured websites.

Here are some ways to prevent your personal information from falling into the wrong hands:

Leave your Social Security Card or Individual Taxpayer Identification Number card at home. If it leaves your house, you have a higher chance of losing it.
Utilize antivirus software on your personal computers and firewalls on your email accounts. Don't open up attachments or click on links that don't look familiar.
Use a private network connection, do not use public wi-fi, to share personal information.
Remember that the IRS and legitimate companies typically will not initiate contact with you to request personal information. That information may be necessary to verify your identity should you contact them first, but they will typically not initiate that contact.

Tip #3 Choose a tax preparer or online tax filing service you trust.

Although most tax preparers are there to help make the process easier for you, there are also some that pose as paid tax preparers in order to steal personal information and defraud taxpayers. The same can be said about online tax filing services. Some may be less effective than others at helping to prevent tax fraud.

Before settling on a tax preparer or online tax filing service, make sure you have done your homework to ensure that they are a reliable resource. Make sure to be mindful of red flags like a promise for a bigger refund, or individuals/services that charge fees based on the size of your refund. They may look for opportunities to bump up their fees, which could result in you owing more money in the long-run. Also, make sure you review all of a tax preparer's credentials, including possible disciplinary actions, before making any hiring decisions.

If you plan on doing your tax return on your own, make sure that you find a free online tax preparation software that clearly explains the steps to take in order to protect your information. Look for online services that use higher encryption to protect the transfer of your data to their site. For example, Credit Karma Tax uses a 128-bit or higher encryption to protect your data. They also use multiple identity verification methods and comply with IRS standards for security, privacy and business operations.

Tip #4 Actively monitor your accounts.

Monitoring your accounts can be a relatively simple task when you utilize the variety of resources now available online. For example, www.annualcreditreport.com provides one free credit report every year. This report will provide you with a very detailed look at your credit on a secure website. This report can also inform you if your personal information has been compromised if a major credit reporting agency suffers a data breach. Although there are other outlets that provide credit reports, they are not necessarily the safest avenues to take, as they may cost money and may not be the most secure. So be mindful and use trusted resources!

To monitor your tax information, you would go through the IRS. That process is a little more involved and does take some time, but it can inform you if someone has filed a tax return in your name and allow you the opportunity to report it immediately.

Tip #5 Be smart when storing your tax return information.

This may be an obvious tip, but it is something that many of us may not give a second thought. Never store your tax returns on your home computer. Instead, use an external hard drive and store that hard drive in a home or bank security vault for safekeeping. You can never be too cautious. You should only send in your tax return electronically when you are using a private network at home rather than public wifi. Utilizing public wifi can make it easier for cyber thieves to hack your computer and steal your tax return information.

Also, if you are using a tax preparer who provides hard copies of your tax returns, make sure to keep those safe as well. Place them in a locked filing cabinet or safe box to ensure that they are

We hope that these tips can help to guide you in the safest direction when it comes to preparing for your tax return this season. For more details on tax fraud, the IRS also provides a helpful website with additional information. You can also contact the IRS's Identity Protection Specialized Unit at 1-800-908-4490 if you have specific questions or think your personal information may have been compromised.

Additionally, If you still feel overwhelmed at the thought of tax fraud and how to keep yourself protected, we have solutions that can help with that. One service that we offer at SSB Bank to help you feel safe and secure is the ID Shield product provided through Legal Shield, a trusted third party provider. For more information on this product and the many resources they provide on the many types of identity theft, including tax identity theft, please visit our ID Shield page or contact our branch and speak to one of our staff members for more details.