Want to Avoid Tax Identity Theft? Follow These Tips

Want to Avoid Tax Identity Theft? Follow These Tips

January 23, 2020
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Are you one of many Americans who look forward to income tax refunds this time of year? Lots of people do and even count on that money to help with their finances. But you should be aware of fraudulent activity that can affect that return. There are criminals out there who can steal your identity and a file tax return in your name—and enjoy that money when it hits their mailbox instead of yours. So, obviously, it’s critical to understand how to avoid tax identity theft.

We are all too familiar with the horror stories and negative impact that a stolen identity can have on your life. And, having someone file income taxes in your name is also an absolute nightmare. Instead of getting the return check you’re looking forward to, you get a letter from the IRS letting you know that “you” have already filed your taxes. Let that sink in. The red tape you have to deal with to get it all straightened out can be overwhelming and time consuming to say the least. So, let’s discuss what you can do to avoid tax identity theft.

Tips to Avoid Tax Identity Theft

The sooner you file your taxes, the better. So many people wait until the last minute to file, which gives criminals ample time to file in your name. If you’ve already filed—they’ll be unable to use your name to do so.

Make sure you review your credit report regularly. This is a great way to monitor fraudulent activity. Experian and LifeLock offer fraud alert programs to help prevent people from stealing your identity. You can connect bank accounts and credit cards for them to monitor for suspicious activity. They can even warn you if someone tries to open a new credit card or apply for a loan with your Social Security number.

Request and review your annual Social Security earnings statement. If someone has used your Social Security number to apply for a job, their earnings will appear on your statement. You can take immediate steps to rectify this situation before it gets out of hand.

Beware of email and phone scammers. These people are clever. They clone logos and emails of banks and other accounts you may have or masquerade as one of these institutions over the phone. Do not give out any personal information to anyone who contacts you and asks for it. Instead, hang up and call the institution yourself at a number you are certain is legitimate.

Use strong passwords and change them frequently. A strong password helps deter cybercriminals from accessing your email and other online accounts. Change it frequently to circumvent their access to your accounts if your password is ever compromised. A strong password consists of capital and lowercase letters, numbers, and symbols. Pro tip: Do not keep your password list on your computer where expert hackers can possibly obtain access to them.

Check into freezing your credit. Doing this has a great potential to prevent people from taking out loans or buying things in your name. For instance, if someone tries to buy a car in your name, when your credit is checked for loan purposes and institutions see there’s a freeze on it, chances are they won’t approve the loan.

Don’t give your Social Security Number to everyone who asks for it. Decades ago, giving out your number was commonplace. This practice is not so as popular today because of the danger of identity theft. So, ask whoever requests your number if they accept alternate identification (driver’s license number, address, phone number, etc.).

These are just a few of the best ways to protect yourself and avoid identity theft. Not every method is promised to prevent someone from stealing your identity. However, implementing the tips above can certainly help and deter would-be hackers and thieves. For additional information, visit Identity Theft Central published by the IRS. Vigilance is critical.

Additional reading:

Tax Fraud: What You Need to Know