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Guarding Yourself from Tax Fraud

Many people associate tax season with the month of April. However, there are plenty of reasons to file early instead of waiting until the last minute. The two most obvious are to get your refund back sooner (if you’re receiving one) and to avoid long lines in the early-April post office rush.

But one of the most compelling and more surprising reasons to file your tax return early is to get ahead of would-be thieves. With the sharp increase in transactions requiring the sharing of confidential data online and off, tax season is an opportune time for criminals to steal personal data. They may also seek to capitalize on information they’ve previously obtained. That’s why filing early might be an important defense.

Common Ways Tax Fraudsters Operate

Criminals can use your stolen Social Security number or personal tax identification number to fraudulently file a tax return in your name. They cash in by having your refund re-routed to a different address or bank account. Unfortunately, many victims discover their identity has been stolen only after a fraudulent claim is filed.

However, the earlier you file your return, the less opportunity someone else has to file a return in your name. Filing early can bring the identity theft to light sooner rather than later, minimizing the time and damages associated with resolving the fraud.

Identity thieves may also sell your stolen Social Security number and personal information to those with poor credit or criminal records, who then use that information to apply for a job. Their employers report earnings to the IRS under your name. Then, when you file your return, the IRS could come after you for failing to report all of your income.

Additionally, criminals may use your Social Security number to fraudulently apply for tax or government-funded programs — like Social Security or Medicare — in your name.

Keep in mind that the cost of recovering your identity is not limited to the replacement of stolen items or money, it can also include attorney fees, lost wages, ID replacement, mail, and phone charges.

Fake IRS Emails

According to the IRS website, the IRS doesn’t reach out to taxpayers for personal information unless there’s an issue. If you receive an IRS email, it’s likely a scam. Here’s what the IRS suggests if you receive one:

  • Don’t reply.
  • Don’t open any attachments. They can contain malicious code that may infect your computer or mobile phone.
  • Don’t click on any links. Visit the IRS identity protection page if you clicked on links in a suspicious email or website and entered confidential information.
  • Forward (preferably with the full email headers) the email as-is to the IRS at [email protected]. Don’t forward scanned images because this removes valuable information.
  • Delete the original email.

Shielding Your Identity When Filing

When filing your taxes, be extra vigilant about how, and with whom, you share personal information. In addition to filing early and avoiding email scams, there are other ways to help reduce your risk of falling victim to tax thieves:

  • If filing offline, make sure not to leave any tax forms in the car and to shred any paperwork you don’t need before throwing it out.
  • If filing online, log-off completely when finished with each transaction and be wary of slow-running computers.
  • However you choose to file, request your refund as a direct deposit so criminals can’t have it redirected to their address or steal it from your mailbox.

Shielding your identity from tax frauds and knowing how they operate can help keep your money where it belongs and give you a greater sense of financial security.

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