Three Ways to Protect Yourself Against Tax Identity Theft
Another tax season means an increase in tax identity theft. In 2020, nearly half of all Americans experienced some form of identity theft, and in the prior year the IRS lost between $90 million and $380 million to fraudulent returns.
The IRS has been developing more and more ways to catch attempts at tax fraud, but alone their efforts aren’t enough. Fortunately, anyone can take precautionary measures to protect against tax identity theft, including filing a tax return early and safeguarding sensitive personal information.
What is Tax Identity Theft?
Tax identity theft occurs when a person uses someone else’s name and information to fraudulently file a tax refund and collect the refund. According to the IRS, both individuals and businesses can be targeted by tax identity theft.
Unless the victim monitors their Social Security number (SSN) or receives fraud alerts, they likely won’t find out until they attempt to file their taxes. Upon filing, the IRS will send a notification that the return was already received or simply reject the return.
Recovering from tax identity theft can be difficult without professional support. Once a victim of tax identity theft takes steps to remedy the fraud, it can take months for the IRS to sort out and provide any refund that may be owed.
How Do Criminals Steal Your Tax Identity?
It’s important to be aware that your personal information is vulnerable to imposters and other criminals who want to commit tax identity theft. Here are the most common ways that personal information and Social Security numbers can be compromised:
- Cybercriminals steal the information in a data breach.
- Sensitive documents are found, stolen or taken from the trash.
- Someone impersonates an IRS agent and requests information over the phone, by email or text, or through social media.
Three ways to protect yourself against tax identity theft
Anyone can take steps to protect against tax identity fraud. Here are a few ways to reduce your likelihood of becoming a victim:
- Get comprehensive identity protection
If a fraudster has enough information to commit tax identity theft, they can potentially commit other types of fraud. Identity protection services can help you be aware of possible identity theft and other damage by alerting you to suspicious activity and helping you respond right away.Consider a comprehensive protection service like Complete ID™, which comes with SSN Identity Monitoring, Dark Web Surveillance, mail change alerts, credit alerts, identity restoration services and more. Costco members can sign up for Complete ID for a low, member-only price starting at $8.99 per month1 for individual plans and $18.99 per month2 for family plans for Executive Members. Complete ID has the plan that’s right for you and your family to help protect against identity theft.
- File early
Filing your taxes early has several benefits. Once you file your return, no one else can file in your name, so early filing reduces the amount of time a criminal can target you. For anyone who owes money to the IRS, filing early also gives you a chance to see what your tax bill amounts to and gives you more time to come up with the funds.
- Protect your Social Security number
Whether it’s written down or stored electronically, your SSN should always be kept in a safe and secure place. Documents with your SSN should be locked away or shredded. Avoid carrying your Social Security card with you, and be sure to use strong passwords and software updates to keep cybercriminals from accessing your information electronically. Never give out your SSN or any password over email.You can also create a free account with the Social Security Administration to check if anyone has used your SSN to report income and may be attempting employment-related tax identity theft.
If you’ve been a victim of tax identity theft, it could be a long road to recovery. You’ll still have to file your taxes and you may be required to file a paper return. Anyone who owes money will still have to pay their tax bill. If you experience tax identity theft and have Complete ID, an Identity Restoration Specialist is available 24/7 to help you respond and recover.
1 $8.99 per month per person for Executive Members or $13.99 per month per person for Gold Star and Business Members, plus sales tax where applicable.
2 Two adults plus children plan is $18.99 for Executive Members or $29.99 for Gold Star and Business Members, per month plus applicable sales tax. Other plan options available. Both adults must be active Costco members and at the same Costco membership level. Child monitoring includes up to 5 children under the age of 18. One-time Parent/Legal Guardian verification is required to receive alert details for children.
Service provided by Experian®.
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