Tax identity theft occurs when a thief obtains important information, such as your Social Security number, and uses it to file a fraudulent tax return. This typically happens early in the tax season, before the victim files their legitimate return. The identity thief can then steal the victim's tax refund, causing financial loss and emotional distress.
E-filing has worsened this issue because identity thieves can easily create fake supporting documents to submit with their digital claims, making it harder to detect them. However, there are effective solutions available. Investing in identity theft prevention software can help protect you from becoming a victim.
Many affordable options are available, starting from just a few dollars per month, and you can tailor the package to your specific needs. You can also use the software to protect other members if you have a family. Investing time to research and choose the right package can save you money and trouble in the long run.
Additional issues
While tax identity theft is becoming increasingly commonplace, broader issues are also at play here. With so much of our lives now being online, including everything from social media profiles to the claiming of expenses and the e-filing of our taxes, plus all those other points, there are more opportunities for identity thieves.
Sometimes, it might only be something you overlook, which can give an identity thief a helping hand they’ve been looking for. A frequent scenario is that you might be a victim of identity theft and not even realize it. However, you could start noticing unusual activity around your personal information over time. Remember that identity theft doesn’t only affect people in the run-up to tax filing time.
It can happen to anyone and at any time, too. Identity theft can cover insurance, bank accounts, and medical theft. Anything is possible if fraudsters can do something with your personal information and gain financially.
Tax fraud
While any identity theft is bad news, tax-related ID theft can cause significant issues if things aren’t in order. Therefore, getting yourself sorted out with an identity theft protection package is a great way to help reduce the threat.
You can also take steps to protect yourself more effectively too. Although it may not always be evident that you might have been the victim of ID theft, you can keep an eye out for some tell-tale signs. For example, one fairly obvious way to detect tax-related identity theft is if you attempt to file and the IRS rejects your e-filing documentation or sends you paperwork stating that a return has already been submitted.
Other signs
Other signals should get alarm bells ringing, too. The IRS may, for example, say that you have received more wages than you earned during a tax year. If someone has managed to get hold of your Social Security number, they could also have a job and use your information to avoid being detected. You could also get letters from the IRS containing information that doesn't add up or relate to your tax situation.
Tax identity fraudsters are continually changing and adapting their tactics, so the overall picture is evolving, too. As the IRS clamps down on one area of fraud, criminals often move on or adjust their tactics to stay ahead of the game. If you're unfortunate enough to fall victim to identity theft, there is help at hand, however, and we'll also take a look below at the steps you'll need to take next to combat any damage that might have been done.
Next steps
If you believe you've been the victim of tax-related identity theft, you'll want to report it as soon as possible. It may be that the IRS will contact you explaining that they have spotted irregularities relating to your Social Security number and associated tax account. Alternatively, contact the IRS by calling them and completing form 14039, which needs to be returned to the revenue service.
Ensure you keep any records or other information relating to the issue. In addition, ensure that you keep tabs on any other areas of online activity, such as inspecting bank accounts frequently for any irregularities. Fraudsters may just be going after your tax payment, but if they have the correct information, they may pursue your finances, set up credit cards in your name, and more.
Suppose you've been careless with your Social Security number or have been unfortunate to share it mistakenly via something like a phishing email. In that case, contacting the Social Security Administration is possible. Try calling them at 1-800-269-0271 and explain what has happened. The sooner they can act, the less likely fraud will continue using your details.
This government department has a wealth of great information and advice on what to do if you suspect you're a victim of identity theft, so it's well worth reading through their advice to reduce the threat moving forward. And in the meantime, take a look at those identity theft protection packages, which will hopefully help you spot any potential hazards in the future.
More from TechRadar Pro
- Check out the best identity theft protection
- The best tax software around today
- Take a look at the best accounting software
