Tax season is a big time of the year for identity theft and fraud, as scammers try to steal your personal information in order to file a fraudulent tax return and intercept your tax refund. Tax identity theft costs taxpayers at least $5.2 billion every year, according to reports.1
In order to protect yourself from identity theft and ensure you receive any tax refund you may be eligible for, you’ll want to follow a few key tips. Here are several ways that you can reduce the risk of tax refund fraud and identity theft:
How to prevent tax fraud or identity theft.
File your taxes early
The deadline for employers to send you your W2 forms is January 31st.2 However, the deadline for filing taxes isn’t typically until April 15th, which leaves a period of time for fraudsters to slip in and file a fraudulent tax return in your name.
Because the IRS only allows one tax return to be filed per Social Security number for each year, you can reduce the risk of tax identity theft by filing as early as possible. This ensures that you get your tax return in before any potential fraudsters. By filing your taxes early, if someone has filed a fraudulent tax return in your name, you’ll know sooner rather than later that your information has been compromised so that you can report it.3
Choose direct deposit for your tax refund
Another form of tax theft or fraud involves thieves stealing your tax refund check from the mail. While the IRS mails paper refund checks securely via the U.S. Postal Service, thieves may try to steal checks out of unsecured mailboxes.4
By selecting direct deposit for your tax refund instead of a paper check, you can eliminate the risk that the check gets intercepted. The IRS uses an electronic transfer system to better secure your funds when you deposit your tax refund directly into your account.5
Watch out for fake IRS scams
Many fraudsters will impersonate the IRS in order to steal your Social Security number or other personal or financial information. Remember, the IRS will not initiate contact with taxpayers via email, text message, social media, or by phone to ask for your personal or financial information. Be wary of IRS scams and learn what to look out for.6
Tax refund fraud is a problem that affects many Americans each year, but you can take steps to prevent it. By filing your taxes early, using direct deposit, and being cautious with your personal information, you can help ensure that your identity is protected.
