Stop Tax Identity Theft: Practical Steps to Protect Your Tax Identity

Tax identity theft is a serious issue where criminals use your Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN) to file fraudulent tax returns and steal your refund. Imagine someone else walking into the bank and withdrawing money from your account – that’s essentially what tax identity theft is, but with your tax refund. The good news is that there are several proactive steps you can take to significantly reduce your risk.

One of the most crucial defenses is to safeguard your personal information like your SSN or ITIN. Think of your SSN like the key to your tax identity. Just as you wouldn’t hand out your house key to strangers, be extremely cautious about sharing your SSN. Don’t carry your Social Security card in your wallet unless absolutely necessary. Be wary of requests for your SSN, especially from unfamiliar sources online or over the phone. Legitimate organizations will rarely ask for this information through unsecured channels.

Create strong, unique passwords for all online accounts, especially those related to taxes, banking, and email. This includes your IRS account if you have one, your tax preparation software accounts, and even the email account you use for financial matters. A strong password is like a complex lock on your door – harder to pick. Avoid using easily guessable passwords like “password123” or your birthdate. Instead, opt for a combination of uppercase and lowercase letters, numbers, and symbols. Consider using a password manager to securely store and generate complex passwords.

Be vigilant about phishing scams. Cybercriminals often use fake emails, text messages, and phone calls that look like they’re from the IRS or your bank. These scams, known as phishing, are designed to trick you into giving up your personal information. Remember, the IRS will never initiate contact via email or text message to request personal or financial information. They primarily communicate through postal mail. If you receive a suspicious communication claiming to be from the IRS, do not click on any links or provide any information. Instead, contact the IRS directly through their official website or phone number to verify.

File your taxes early in the tax season. Tax identity thieves aim to file fraudulent returns before you do. By filing early, you can beat them to the punch. This makes it much harder for a criminal to file a fake return in your name and claim a refund. Think of it like getting to the front of the line – the legitimate return is processed first, blocking fraudulent ones.

Use secure Wi-Fi networks when filing taxes online. Avoid using public Wi-Fi at coffee shops or libraries when transmitting sensitive tax information. These networks are often less secure and can be vulnerable to hackers who might intercept your data. Use your home’s secure Wi-Fi network, or a trusted virtual private network (VPN) if you need to use public Wi-Fi.

Consider obtaining an Identity Protection PIN (IP PIN) from the IRS. An IP PIN is a six-digit number that the IRS provides to eligible taxpayers to help protect them from tax-related identity theft. It’s like adding an extra security code to your tax account. When you file your taxes, you must provide this IP PIN in addition to your SSN. This makes it significantly harder for someone to file a fraudulent return in your name because they won’t have your unique IP PIN. You can apply for an IP PIN through the IRS website.

Regularly monitor your credit reports and bank accounts for any suspicious activity. Unusual activity could be an early warning sign of identity theft. You are entitled to a free credit report annually from each of the three major credit bureaus (Equifax, Experian, and TransUnion). Review these reports for accounts you don’t recognize or inquiries you didn’t authorize. Similarly, keep a close eye on your bank and financial account statements for any transactions you didn’t make.

Shred sensitive documents containing personal information before discarding them. This includes old tax returns, bank statements, credit card offers, and any documents with your SSN or account numbers. Shredding is like permanently erasing information, making it unreadable to anyone who might try to retrieve it from your trash.

By implementing these preventative measures, you can create a strong shield against tax identity theft and protect your hard-earned money and financial well-being. Staying informed and proactive is key in the ongoing fight against identity theft.