Around this time of year taxpayers can get anxious about the threat of identity theft especially when it comes to tax fraud. We receive questions regarding how you can protect your data and personal information, and we hear a lot of unrealistic and exaggerated advice that is only confusing taxpayers and spreading fear. Here are five points we believe will help taxpayers protect themselves and their financial information:
- Not all data breaches or computer hacks result in identity-theft-related tax fraud. There are thousands of breaches and internet scams a week and it can be hard to tell which ones are a direct threat to you. First, you need to understand that not all scams are identity theft targeted and not every identity theft is tax related. If you know that your information has been compromised, it is important to contact the company with whom the information was associated. Some companies have already began protecting you and implementing damage control tactics. Other companies might offer credit monitoring and black-market information reviews.
- Filing Early Doesn’t Prevent Identity Theft – This tax season we have seen a bigger push to electronically file your tax returns early. While we, and most, tax professionals recommend that you file online to prevent a second fraudulent return being filed, this does not fix the underlying issue. Your personal information is still in the hands of somebody else, even though they may not get to file a return in your name. We recommend still following up with the company that lost your data.
- Rushing to file an incomplete return isn’t a good strategy – Filing early is a good idea, however, that is only the case if the return is complete and accurate. A lot of individuals believe that filing early, inaccurate or incomplete, will save them from identity theft or that they can pick up on it later. The IRS will penalize you for this, in the form of fiscal penalties or delays on your return. File when you have the time to complete an accurate return, it is worth it! Check your work!
- Not Every Taxpayer needs an IP Pin – An IP PIN, or Identity Protection Personal Identification Number, is a six-digit code that acts as a back-up for your social security number. It prevents your social security number from being used on a fraudulent return. The IRS can match your IP PIN and SS to ensure that you are the correct individual on the tax return. In order to qualify for a PIN you must have either received a letter from the IRS inviting you to get one or you filed a tax return last year in the state of Florida, Georgia, or the District of Columbia. You cannot opt into the IP PIN group if you do not meet criteria.
It’s important to protect yourself, especially during tax season. Being careful and vigilant can help you protect your identity. There is no full-proof way to keep yourself safe, but as long as you try and watch your credit carefully, you can help make sure if your identity does get stolen, the damage is fixable.