When you think of identity fraud, your first thought is probably credit cards.
However, credit card fraud is not the most commonly reported form of identity theft. According to a report from the Federal Trade Commission (FTC), tax- or wage-related fraud accounted for 45 percent of reported identity thefts.
You might be at a greater risk of tax refund fraud than you think. As you get ready to file your tax return (or even if you already have), see what’s at stake and learn how to protect yourself.
How to protect yourself from tax-related identity fraud
Tax refund fraud occurs when someone has access to your personal information and files a tax return in your name. This means that someone stole your tax refund. Though it’s possible to get it straightened out, it’s a long, complex process.
While you can’t guarantee that you’ll never be a victim of identity theft, there are things you can do to protect yourself during tax season. The National Cyber Security Alliance (NCSA) has some helpful tips on protecting yourself against tax refund fraud:
1. File tax forms on secure websites
Start with the websites you use to file your tax forms. Make sure they’re secure by looking at the URL bar; the web address should start with “https.” There is also usually a locked padlock icon as a visual cue.
Well-known tax preparation software and prep services like TurboTax, Liberty Tax, and H&R Block are safe bets. Of course, if you file online using different e-file options from the IRS, your data is secure as well.
2. Ask your accountant questions about security
If you hire an accountant to prepare your tax return, the NCSA recommends that you ask if their software is up-to-date and if their systems are protected against malware.
You might not think that your accountant is risky, but without proper security, fraudsters could get your information by infecting your tax preparer’s computer.
3. File your tax documents early
An essential part of identity protection during tax season is filing early. You can cut down the chance of tax refund fraud when you are one of the first to file.
If you filed your taxes and your refund is on the way, a scammer who files in your name will be rejected as a duplicate — instead of the other way around.
4. Follow common sense security rules
Finally, you can reduce the chances of being a victim of identity fraud by following standard best practices, according to the NCSA. These include creating strong passwords, avoiding public WiFi when filing your taxes, and installing security software on your computers.
You’re less likely to see your identity stolen during tax time or any other time when you are vigilant.
What to do if you’re a victim of tax refund fraud
If you get a notice from the IRS claiming you’ve already filed your taxes and received a refund (and you didn’t), it’s time to take action. You are a victim of identity fraud and you need to work to straighten out the situation as quickly as possible.
Here are the steps to take if you’re a victim of tax-related identity fraud:
1. File Form 14039
Form 14039 is an affidavit of identity theft. When you submit this form, you’ll need to send in copies of documentation, including your driver’s license, passport, or state-issued ID.
Call the IRS Identity Protection Specialized Unit (800-908-4490) to alert them as well. You can also download an app from the Identity Theft Resource Center to help you document everything.
2. Don’t forget your state taxes
Don’t forget to contact your state’s tax office, too. You might see some problems with your state taxes if you’re a victim.
3. Check your credit report
Identity protection is about staying on top of things. Check your credit report to see if fraudsters are using your information to do other things, like open credit accounts in your name.
While you’re at it, stay on top of bank accounts and credit card accounts by checking for fraudulent purchases. The faster you catch these items, the sooner you can fix it.
4. Report to law enforcement
Finally, report to law enforcement. You can report identity theft to the FTC and also file a report with local law enforcement.
Unfortunately, fraudsters probably won’t get caught. But the documentation can go a long way if you need proof that you’re doing your due diligence to fix the matter. If you need to cancel a fraudulent account or get things changed on your credit report, your law enforcement report can help.
Tax scams to watch out for
Every year, the IRS releases its “Dirty Dozen” list of tax scams. If you want to reduce your chances of identity fraud, be on the alert for the following scams:
This is all about stealing your personal information online. Fraudsters pretend to be the IRS in an effort to get access to your information. You might see an email linking you to a fake website. You enter your information — including your Social Security number — and criminals know exactly how to impersonate you.
The IRS won’t ask you for information via email. Additionally, if there is a problem with your information or if the IRS needs something more, you will receive snail mail.
You might have gotten an alarming voicemail claiming that the IRS is about to sue you. According to the caller, there might even a warrant out for your arrest. In this scary situation, it’s easy to freak out and give the caller everything they want to know — but don’t panic.
The IRS says these phone scams are on the rise. However, the IRS will contact you through the postal service initially, so disregard these types of calls.
Most of us like to help others. However, scammers take advantage of this and use fake charities as a way to collect your information for identity fraud purposes.
When you go to claim your deduction, you might find yourself in trouble with the IRS for claiming a deduction that isn’t legit. You’ll owe more than you thought, and someone out there has your information and could be stealing your identity.
No matter where you’re at with taxes, it’s important to be attentive. Estimate what you should owe or when you can expect your refund. That way, you can figure out if something is wrong.