7 Ways to Avoid Tax ID Fraud

With the 2018 tax season underway, it is essential to take extra precaution when filing your return. The latest scam involves criminals using a stolen Social Security number to file a false tax return. Since they do this early in the year, victims aren't even aware of the fraud until they file their return and find out one has already been filed in their name. 

To avoid this nightmare scenario, we've put together some tips to avoid falling victim to this type of identity fraud:

  • File early. File your tax return as soon as you are able giving criminals less time to use your information to file a false return.
  • File on a protected Wi-Fi network. If you are using an online service to file your return, be sure to connect to a password-protected personal network. Avoid using public networks like a Wi-Fi hotspot at a coffee shop.
  • Use a secure mailbox. If you are filing by mail, drop your tax return at the post office or an official postal box instead of your mailbox at home. Some criminals look for completed tax return forms in home mailboxes during tax season.
  • Find a tax preparer you trust. If you plan to hire someone to do your taxes, get recommendations and research a tax preparer thoroughly before handing over all of your financial information.
  • Shred what you do not need. Once you have completed your tax return, shred the sensitive documents that you no longer need and safely file away the ones you do.
  • Beware of phishing scams by email, text or phone. Scammers may try to solicit sensitive information by impersonating the IRS. Know that the IRS will not contact you by email, text or social media. If the IRS needs information, they will contact you by mail first.
  • Keep an eye out for missing mail. Fraudsters look for W-2s, tax refunds or other correspondence containing your financial information. If you do not receive your W-2s, and your employer indicates they were mailed, or it looks like it has been previously opened upon delivery, contact the IRS immediately.

If you believe you are a victim of tax identity theft, or if the IRS denies your tax return because one has previously been filed under your name, alert the IRS Identity Protection Specialized Unit at 1-800-908-4490. Also, you should: 

  • Respond immediately to any IRS notice and complete IRS Form 14039, Identity Theft Affidavit.
  • Contact your bank immediately, and close any accounts that have been tampered with or opened without your permission.
  • Contact the three major credit bureaus to place a fraud alert on your credit records: Equifax, www.Equifax.com, 1-800-525-6285; Experian, www.Experian.com, 1-888-397-3742; TransUnion, www.TransUnion.com, 1-800-680-7289.
  • Continue to pay your taxes and file your tax return, even if you must do so by paper.

More information about tax identity theft is available from the FTC at ftc.gov/taxidtheft and the IRS at irs.gov/identitytheft.

Source: American Bankers Association, News to Use, February 2018.