The idea of someone stealing your personal information and identity is scary. And now that we’re in the midst of tax season, it’s an even greater threat: according to the U.S. Federal Trade Commission, tax identity theft (also known as “tax refund fraud”) is the main reason there’s been a 47% spike in general identity theft. And unfortunately, you don’t know you’re a victim of tax identity theft until it’s already happened. Here’s what you need to know to better protect your identity.
Warning signs you’re a victim: The #1 red flag that you’re a victim of tax identity theft is if you’re notified that a tax return has already been filed with your Social Security number. If you e-file, you’ll know it has happened if your return is rejected; if you paper file, you’ll receive a letter from the IRS saying a return has already been filed using your Social Security number.
Another warning sign is if IRS records show you earned more than you actually reported. In this case, it could mean someone used your Social Security number to get a job.
What to do: If you realize that you’re a victim, you need to file IRS Form 14039 (“Identity Theft Affidavit”) to alert the IRS of the situation. You still need to pay your taxes and file your return, even if you must do so by paper.
In addition, you should file a report with your local police, file a complaint with the Federal Trade Commission, and contact the three major credit bureaus (Experian, Equifax, and TransUnion) to place a fraud alert on your accounts.
Another useful tool is IdentityTheft.gov.
How to better protect yourself: One of the best ways to better prevent tax identity fraud is to file your tax return as soon as you possibly can, no matter if you’re expecting a refund or if you owe money. This way, if you’ve already filed a return, it means a scammer can’t file a fraudulent return in its place.
And always protect your Social Security number. Don’t carry your card with you. Just because a business asks for your number doesn’t mean you must give it – only offer it if it’s mandatory.
The Simply Money Point
At Simply Money Advisors, our goal is to help protect your money and make it grow. That includes protecting your money from scammers. This tax season, use these tips to be on the lookout for anything suspicious. And if you do become a victim, be sure to act quickly.