Finance Globe

U.S. financial and economic topics from several finance writers.
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Tips to Avoid Tax Identity Theft

Tax identity theft is growing in the United States. In fact, 43% of identity theft complaints received by the FTC in 2012 were related to tax fraud. The IRS received close to 940,000 fraudulent tax returns in 2012 (for the 2011 tax year) compared to only 242,124 in 2011. They expect the number to reach 1 million for the 2012 tax year.

Thieves don’t need a lot of personal information to commit tax id theft. Just your social security number is enough. So, the most important step to avoid being a victim of tax identity theft is to keep your social security number safe. Be careful about where you store your social security number, who you give the number to, and what documents you write it on.

If an identity thief files a fraudulent tax return using your social security number, the IRS could reject your legitimate tax return. And, if you’re due a refund, you’ll have more trouble getting it, especially if the thief has already received a refund with your social security number. You may not find out an identity thief has filed a return in your name until the IRS rejects your return or sends a notice saying that multiple returns have been filed with your social security number.

File early. Once the IRS receives and processes your real return, it’ll be more difficult for thieves to file a fraudulent return using your social security number.

Be careful whom you let do your taxes. Tax preparers pop up all over town around tax time. The IRS doesn’t require any professional certifications or education for people to be tax preparers. So, the person approaching you to prepare your taxes may not truly be qualified to do your taxes. And not all of these people can be trusted, especially those who guarantee a big refund without knowing your financial situation. Check their credentials, training, and experience and be wary of tax preparers to tell you to lie on your taxes to receive a bigger refund.

File electronically, if possible. The IRS will receive your tax return much faster. But if you file by mail, drop your return inside the post office rather than sticking it in the mailbox. Thieves have even been known to steal mail from the blue post office drop boxes that sit outside the post office and on streets around the city. Opt to have your refund direct deposited into your bank account to avoid having a check intercepted and stolen from the mail.

Don’t click on links in emails that claim to be from the IRS. According to the IRS website, they will not use email, text messaging, or social media to request personal or financial information from you. Assume emails, texts, or Facebook or twitter messages from the IRS are fraud, especially if you’ve never given the IRS this contact information. The IRS suggests forwarding suspicious emails to phishing@irs.gov. Forward IRS-related phishing texts to 202-552-1226.

If you have a question about your return, call the IRS directly using a number from IRS.gov or a notice you’ve received in the mail.

There’s a possibility that you may become a victim of other types of identity theft if you’ve already been a victim of tax identity theft. Considering placing a fraud alert or security freeze on your credit report if your social security number has been compromised. Monitor your credit reports frequently to be sure that thieves aren’t opening new accounts in your name. Report fraudulent accounts to the police, the credit bureaus, and the creditors immediately.

Sources: FTC.gov, IRS.gov, BBB.org
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Saturday, 24 August 2019

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