Tax Season Is Prime Pickings for Identity Thieves
The FTC Consumer Sentinel Network reports 20,885 reports of employment and tax-related fraud in the fourth quarter of 2020 alone. With tax season in full swing, and many people eager to get their tax returns in to receive their third stimulus payment, it represents a perfect opportunity for identity thieves to cash in.
Best Practices for Keeping Your Identity Safe During Tax Season
While the IRS and state tax authorities adopted stricter measures to reduce identity theft, it can still occur. This guide provides tips to protect your identity while doing taxes and ways you can spot if you are a potential victim of identity theft.
File Your Taxes Early
The IRS extended the deadline to file taxes this year from April 15 to May 17, 2021. While this gives you more time to file your taxes, it also allows thieves more time to file one in your name. They can access basic information like your name, Social Security number, address, and more through phishing scams, hacking your computer and other clever measures.
Alternatively, they could also use your personal information when they apply for a job. In turn, when tax season arrives, the thieves use the documentation from their employer to file a tax return in your name to snag a refund or leave you on the hook for large tax debt.
Since the IRS only allows one return from a Social Security number, thieves could prevent you from filing a legit return if they file first. This is why it is vital to file your taxes early every season, no matter the tax deadline. Not only can you beat the thieves to the punch, but you also get your taxes out of the way — which is a relief for everyone.
How Do I Protect My Identity When Filing Taxes?
To start, you want to protect the devices you use to access your personal and financial accounts. Along with having updated operating and security software on them, you should also have a password manager. A password manager is unique in that it creates elaborate passwords, then stores them for you. That way, you don’t have to jot them down or use the same password for every website — two strategies that are never a good idea. Plus, it is more difficult for thieves to access this information when you file your taxes online.
Another common ploy of identity thieves is phishing scams. Over the years, they have become more elaborate by mimicking emails you might receive from a company. For example, you might have received an email from Amazon notifying you there is a problem with your delivery. However, when you receive these email messages, they require you to click on a link that takes you to a landing page, where they want you to enter your personal information. Doing this gives hackers access to all the information they need.
With this in mind, here are some ways to identify phishing scams:
- You should check for grammatical errors. Chances are there will be a litany of them since hackers want you to react impulsively.
- Companies, banks and the IRS will not ask you to click on links to supply personal information.
- The IRS does not initiate contact with taxpayers through email, phone or social media. So, if you receive unexpected communication from someone claiming to be from the IRS, know it is false.
You can also protect your IRS account with a PIN — a six-digit code you need to enter for the IRS to accept your electronic return. You can also set up an IRS account online. It only takes around 15 minutes. Then, once a month around tax time, you can check to make sure no one else is filing a return in your name.
Be on the Lookout for Suspicious Activity
If someone tries to use your Social Security number to file a tax return, you might receive indicators of this. One is a letter from the IRS requesting more information. However, if you have not filed a tax return yet, or the information does not match your circumstances, it could be a sign someone is trying to steal your identity.
You might also receive a notification there was a creation of an IRS account in your name. If you encounter any of these instances, you need to contact the IRS immediately to rectify the situation.
The IRS gave taxpayers another month to file due to the COVID-19 pandemic. But this extra time also provides identity thieves an additional month to acquire information and file taxes in your name first. Filing your taxes early, using password managers and staying on top of your IRS account reduces the risk of your identity becoming compromised during tax season.