To sustain this free service, we receive affiliate commissions via some of our links. This doesn’t affect rankings. Our review process.
Filing taxes is already stressful, but what if you hit “submit” and find out that someone has already filed a fraudulent tax return in your name? Chaos ensues, and you don’t know how this could’ve happened.
Unfortunately, this is exactly what millions of Americans experience every tax season. Did you know there are ways to prevent this?
- 5 Tips To Avoid Tax ID Theft
- H&R Block CEO: Tax ID Theft Prevention Advice (Video)
- What’s The Cost Of Tax ID Theft?
- How To Know (And What To Do) If Your Identity Is Stolen
According to the Identity Theft Resource center’s call center data, about 34% of all identity theft cases are tax fraud related.
As of year-end 2015, the IRS reportedly prevented $6.8 billion in tax return fraud requests. For those who had their identities used for tax refund fraud, it took an average of 18 weeks to receive their tax refunds.
The best way to avoid false tax return identity theft is to be vigilant starting now. Follow these tips below to do your best to protect your identity.
1. File Your Taxes Early
The sooner you file your taxes the least likely someone else has already used your social security number (SSN) to file a fraudulent tax return. Filing sooner than April is also convenient because the earlier you file, the sooner you get your refund back (if you’re getting one).
2. Share Your Personal Information Cautiously
Be vigilant about who you share your personal information with and how you do so. If someone requests personal information electronically, be sure to verify with a phone call to understand why they need it and the best way to deliver.
This may sound obvious but don’t share your address on social media platforms, never share a password with someone over email or text, and don’t share your social security number with the cashier at the store.
Sometimes you need to share your personal information with professionals. But, be sure the professional you are working with is trustworthy.
For example, sharing your SSN with your tax professional is necessary. When my tax professional asked for my SSN, he had me write it on a sticky note, so I didn’t have to say it out loud and risk someone overhearing me (even though we were in his private office). He then shredded the sticky note, so that no one could snatch it up.
Items to be careful sharing with others:
- Driver’s license
- Bank account information
- Credit/debit card details
3. Use A Shredder
Per the accountant’s example above, use a paper shredder for any paperwork you are recycling that has any personal information on it.
Things you should shred:
- Bank statements
- Insurance papers
- Pay stubs
- Medical records
- Social security statements
- Retirement documents
- Anything with your:
- Phone number
- Bank account information
4. Don’t Email Attachments Containing Important Information
Don’t share your 1099’s, W2’s, previous returns, and any other tax-related documents via unsecure email. If you need to share these documents with your accountant, provide the printouts by handing them off in person or upload them to a secure 3rd party service that is password protected and ideally, has 2 factor authorization (2FA) set up.
If you are filing by mail, personally drop your returns off at the post office and register for a delivery receipt to ensure it is not lost in the mail.
5. Use A VPN
A VPN masks your online use from potential hackers by creating a secure, encrypted connection that lets you file your taxes online without risk. VPN services also hide your location and internet history from companies tracking your data. Checkout the best VPN’s in our comprehensive review.
If you are a victim of tax ID theft, the cost of recovering your identity can be rather expensive.
- Replacement of stolen items or money
- Attorney fees
- ID replacement
- Lost wages
- Mail charges
- Phone call expenses
Not to mention all the wasted time you’ll spend recovering your identity.
Or maybe it has and you’re not aware of it? Learn everything you need to know about identifying, recovering from, and preventing ID theft in our comprehensive guide to identity theft on our sister site, Safe Smart Living.
Got any additional tips for avoiding a fraudulent tax return?
Disclaimer: This website contains reviews, opinions and information regarding products and services manufactured or provided by third parties. We are not responsible in any way for such products and services, and nothing contained here should be construed as a guarantee of the functionality, utility, safety or reliability of any product or services reviewed or discussed. Please follow the directions provided by the manufacturer or service provider when using any product or service reviewed or discussed on this website.