When you see the phrase "identity theft," it’s likely that the first thing you think of is compromised credit and debit cards or a hacked bank account. Often, the identity theft we hear about involves the electronic movement of money, so we have learned to be more careful, protecting how we share information and making sure our personal details are encrypted and secured. However, one crime not often considered is another popular type of identity theft involving your tax returns, though it’s more common than you might think. Let’s look at what is involved and some of the best ways to protect yourself against tax identity theft.
What is Tax Identity Theft?
Tax identity theft is when someone uses your social security number to illegally file your taxes and steals your refund. Unfortunately, you probably won't even know it has happened until you try to file your taxes and cannot or you receive a notice from the IRS. Even if you regularly track your identifiers, such as credit cards and bank accounts, you are still at risk if a thief has managed to access your private information.
The process is straightforward. The thief files a tax return using your identifying information and social security number. Then, using your name and social security number, they establish a bank account online, to which they can deposit your refund. The IRS processes your return, and the money goes to their online account. The money may even hit your legitimate account and immediately transfer to the account they have established in your name – an account that you don't even know exists.
If you receive a letter from the IRS which states that you've been the victim of tax identity theft, make sure you precisely follow the directions provided in the letter. If you are denied trying to file your taxes due to a duplicate filing, you can consult this helpful list from the IRS with step-by-step instructions and immediately contact your CPA.
In our digital world, it may feel like there is little you can do to avoid identity theft. One obvious way to prevent tax identity theft is by not sharing your personal information online. You can also beat criminals to the punch by filing your taxes electronically as early as possible. Additionally, check regularly for new online accounts that may have been created in your name, and immediately report any accounts you do not recognize.
How To Keep Your Information Safe
You can implement steps that will increase the safety and security of your information.
Protect your computers and phones. Use security software, keep your passwords random and strong, use password management software, and require multi-factor authentication to access your information.
Pay close attention to emails asking for your private information. Scammers and thieves often access your information through phishing, and what are seemingly innocent emails, or those that are more sophisticated using graphics and logos from well-known banks and other companies. For more information on how to protect yourself, the FTC offers advice.
Passwords are there to protect you. When choosing your password, use random letters and numbers, including uppercase and lowercase letters, numbers, and symbols, to keep you far safer than weaker passwords that can be easily guessed. You can also request a PIN from the IRS for your taxes.
Use multi-factor authentication to log into sites that require your personal information.
Myrick CPA Client Care Services Package Plan
Preventing identity theft can be an ongoing and complicated job. Myrick CPA’s Client Care Services Package Plan is a plan we offer our clients to help keep you and your money safe. We respond to letters from the IRS and State Tax Authorities and provide tax resolution services to enrolled clients in the event of an audit. Contact Myrick CPA if you discover you’ve been a victim of tax identity theft. We can help you restore your online identity and offer assistance to prevent further problems.