Tax season often brings a surge in scams targeting consumers. Criminals exploit this time of year, making it crucial to understand how to protect your personal information and avoid becoming a victim of tax fraud. Despite IRS recommendations for intervention within 120 days, the average victim waits a staggering 556 days before their case is resolved, according to the National Taxpayer Advocate’s 2023 report to Congress. This delay underscores the importance of proactive measures.
What is Tax Fraud?
Tax fraud occurs when a scammer uses your personal details, like your name, birthdate, and Social Security number, to file a fraudulent tax return. Identifying tax fraud can be challenging. You might only discover you’re a victim when your legitimate tax return is rejected. According to the IRS, warning signs include receiving a W-2 form from an employer you didn’t work for, receiving alerts about unreported income, or having your tax return rejected.
If you suspect your Social Security number has been used fraudulently, report it to the IRS by completing Form 14039, the Identity Theft Affidavit.
Protecting Yourself from Tax Identity Theft
While there is no foolproof method to completely prevent identity theft, several steps significantly reduce the risk. Identity theft monitoring services can alert you to potential threats, enabling you to take action and mitigate damage.
Sign up for identity theft protection.
Here are some things you can do to protect yourself:
- Be wary of unsolicited communications: Scammers often use suspicious emails or letters to obtain sensitive information.
- Look out for phishing scams: Common red flags include a sense of urgency, authority, generic greetings, and unusual email addresses. Never click on links in unverified emails or texts.
- Secure your devices: With most tax returns filed online, strong cybersecurity is critical. The IRS recommends using programs with robust firewalls and anti-virus protection.
- Monitor your credit score: If you’re worried about identity theft, consider monitoring your score to check for any suspicious activity.
- Use security best practices: Avoid sharing personal information on public Wi-Fi, use virtual card numbers, and enable two-factor authentication for all passwords. If you believe you are the victim of a scam, consider freezing your credit.
The best defense against identity theft is a multi-pronged approach. By staying vigilant, using secure technology, and actively monitoring potential threats, you can significantly reduce the risk of becoming a victim of tax fraud and protect your financial well-being.
