How To Prevent Tax Identity Theft (5 Must-Do Tips)

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Clock, pen and taxes on a desk 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?

Article Overview

How To Prevent Tax Identity Theft

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:

  • SSN
  • Driver’s license
  • Birthdate
  • Address
  • Bank account information
  • Credit/debit card details
  • Passwords

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:
    • Name
    • Address
    • Phone number
    • SSN
    • 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.

More Tips To Avoid Tax Fraud Identity Theft (Video)

Watch this video from H&R Block’s President and CEO which discusses how you can avoid tax ID theft. H&R Block is one of our top picks for best online tax software.

How Expensive Is Tax Fraud ID Theft To Victims?

If you are a victim of tax ID theft, the cost of recovering your identity can be rather expensive.

Costs include:

  • 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.

How Can You Know (And What Can You Do) If Your Identity Is Stolen?

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?

About The Author:

Kimberly received her Bachelor of Arts from Simpson College with a major in multimedia journalism and a minor in marketing. She has been writing about business solutions since 2014, covering subjects such as tax software, email marketing, office equipment and more. Her work has appeared in many notable brands, including The New York Times' Wirecutter, Reader's Digest, Forbes, People, Woman's World, and Huffington Post.

In 2015, she started her own business and continues to learn how to run it more efficiently thanks to her work on We Rock Your Web. Her natural curiosity helps her research as she seeks the truth when learning about, comparing and personally testing products and services. With every piece she writes, her goal is to help our readers find the best fit for their unique needs.

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