File Your Income Taxes Before Thieves Do

Tax credits, exemptions, itemized deductions, dividends and capitals gains – you know that that means…it’s time to start working on those federal tax returns! And while Tax Day is still two months away, you might want to get a started on those 1040 forms now before an identity thief files for you. Theft of personal information to file fraudulent tax returns is nothing new to the IRS, who estimate they paid out $3.6 billion to identity thieves despite catching about 14.6 million suspicious returns. Unfortunately, amid the recent data-breaches of trusted online filing applications such as TurboTax, we could all take this as a reminder to get those taxes done and files ASAP.

Tax identity theft can happen in many ways; it could be a person using your Social Security number to get a job (establishing their address for IRS communications) or someone using your SSN or Taxpayer ID# to simply file a return. You usually do not know you have been a victim until you go to file your own tax return, and while the IRS has a team to assist victims, it could be months before you see your refund.

In light of recent breaches, TurboTax is increasing their security protocols and assisting with anyone who was victimized. The IRS, other online tax filing platforms and in-person tax professionals are also upping their data security game, but are you?

Don’t let crooks take your money. Here are a few ways you can protect your identity and your tax return:

File Your Tax Return Early

You don’t have to wait until April 15th to file – filing early can cut thieves off in their tracks. If you file first, then that identity thief won’t be able to use your name and information. If a crook does attempt to file a fraudulent return in your name, the IRS will be better able to flag it if the agency already has your valid return in hand.

And don’t worry, if you contribute more money to your IRA from the day you file until April, you can always go back and submit a form to amend your return. Either way, you are in communication with the IRS before the identity thieves.

Whether it is for E-Filing or Simple Accounting, Protect Your Digital Devices

It is imperative that you take steps to protect your personal information which is stored or sent electronically.

  • Ensure all of your devices have up-to-date anti-virus and anti-malware software
  • If you do file or track your financial statements online, be sure to use a secured internet connection. Avoid conducting or sending sensitive information through the open wi-fi at your local coffee shop
  • Use STRONG passwords and security questions. Don’t use your birth date, name, SSN or standard words “password” or number strings “1234…”. Make sure your passwords use upper and lower case letters, a number and special character. For

example: $tr0nG3r orwhat was the street name of your first home”

Secure or Properly Dispose of Your Important Documents

An identity thief might steal your W-2s, financial statements and other important documents right from your mailbox or digging through the trash. Consider using a locked mailbox or post office box to receive and send tax documents, or e-file.

Inside your home, keep those documents stored in a locked, fire-proof box/cabinet. And shred any documents with personal information before disposing in a trash bin (some people even dump used coffee grounds or kitty litter with shredded paper to deter future compromises).

Don’t Fall for Scams

The IRS (or your bank) will NEVER email, text or call you to request personal information. The IRS only contacts you through postal mail, and when in doubt, call the phone number provided by the IRS online or through your local directory.

If you do receive an email from someone purporting to be the IRS (or another financial institution),do not click on links or download attachments unless you’re absolutely sure the sender legitimate orthe documents are expected.

Protect the Tax Returns of Seniors or Minor Dependents

To protect children and seniors, consider completing Form 8821, which authorizes a person to receive all IRS communications for the individual named on the form. The authorization ensures that if a criminal files a return using your Social Security number or that of a dependent child or senior adult, you’ll receive all IRS communications

Use a Vetted Tax Professional

The IRS has a lot of rules and regulations, plus it is a lot of calculations and sensitive information to manage on your own. It’s no wonder most of us turn to a tax professional to hammer out the details. Check with your trusted family members, friends, financial advisors and the Better Business Bureau to ensure your tax preparer is above board. And if a tax prep business ever asks you to sign a blank tax return, consider seeking a new expert.

Raise the Alarm Immediately If You’ve Been a Victim of Tax Identity Theft

Contact the IRS Identity Protection Specialized Unit immediately if you receive a notice from the agency stating more than one tax return was filed for you, that you have a balance for a year you didn’t file, or that you received wages from an employer you do not recognize. You will also need to file a police report and complete an identity theft affidavit.

Get Help with Your Taxes and Protecting Your Refund

Tax return fraud continues to be a growing threat. Taking protective measures can help taxpayers avoid becoming victims of tax identity theft. Speak with a trusted financial advisor or tax professional who can help you reduce your tax liability and navigate the filing process quickly and securely.

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