While reports of identity theft have fluctuated year to year, it continues to be a major concern citizens need to be …
It’s tax season here in the U.S., and millions of people will be filing their returns and hoping to see a sizable refund. The thing is, scammers love tax season too; after all, with all this money moving around, there are plenty of opportunities to steal a small fortune. And scammers have developed clever ways to snatch your money before you’ve even had a chance to figure out what went wrong. Here’s how to protect yourself against tax scams.
Tax scams have been going on for some time, but it is increasing in frequency each and every year. For 2018, we’re expecting perhaps the worst year in history.
Why? Remember the giant Equifax breach, the one where 145 million Social Security numbers were hacked and exposed? With all that data now on the black market, it’s never been easier for scammers to file fake tax returns under your name and claim the refunds for themselves.
Even if you were smart and initiated a credit freeze after the breach (so you’ll be alerted if anyone tries to open up a new account under your name), it won’t protect you from tax-related identity theft. Criminals will use those Social Security numbers to file fraudulent tax returns and steal millions of dollars worth of refunds.
The Internal Revenue Service (IRS) even has a list of a dozen ongoing scams that they call the Dirty Dozen. With the rise of stolen tax returns and tax scams, it’s becoming increasingly difficult to recoup your lost refunds and, indeed, your identity.
Here’s how to recognize the telltale signs of a tax scam, as well as some essential tips to protect yourself.
Beware of phone scams. If you get a call from either a live person or a threatening recording claiming they are the IRS and stating that you owe money and must pay up now or face arrest, this is always a scam. It may be disconcerting, but the IRS does not call anyone. Ever. This is the number one scam that criminals use during tax season. So beware.
Email phishing attacks. Hackers posing as the IRS via email and asking you to update your e-file are also scams. This is the same type of threat as made over the phone. If you enter your information into an email or a spoofed website, it is likely that your refund will be gone. The IRS does not send emails, text messages, or engage in social media requesting financial information. If you receive any correspondence like this, do not reply, and if you’re unsure over its legitimacy, contact the IRS directly via their official phone number.
Identity Theft. Once a hacker steals your Social Security number (SSN), they will pose as you to file your tax return. Then, they’ll have the refund sent directly to them. When you eventually file your tax return, the IRS will decline your return and send you a notice stating that more than one tax return was filed under your name. Victims of identity theft should contact the IRS and download form 14039 which will begin the process to straighten out the issue. It may also help prevent tax-related identity theft in the first place.
Protect your documents. Store sensitive documents in a fireproof safe. Financial information in the mail is attractive to thieves so make sure you have a locking mailbox.
Shred, shred, shred. Check with your accountant to determine what documents you need to keep and be sure to shred the rest. Use a cross-cut shredder—never just scrunch them up and throw them in the trash.
File early. The earlier you file, the sooner you thwart a criminal’s attempts to file under your name and steal your refund. Don’t give them the chance to file first.
Keep your guard up. We’ve talked about phishing scams, but be sure you don’t click on any suspicious links or download any weird email attachments—regardless of who they are from. And always navigate to IRS.gov on your browser directly.
Use secure internet. When filing online, do so from a wired connection or an encrypted WiFi network in your home or office. If you are a road warrior and often find yourself connected to public WiFi (like in a coffee shop, airport, or hotel), then download and install a trusted and secure VPN service like Hotspot Shield. This will encrypt your online activities and keep your sensitive data shielded from prying eyes.
Protect your devices. With your VPN downloaded on both your mobile device and computer, you should also install comprehensive security software like an antivirus and malware protection to protect your PCs, Macs, smartphones, and tablets—and keep all your devices updated.
Filing your taxes can be stressful enough. The last thing you want is to find that a hacker has beaten you to it and your entire refund is gone. Thankfully, by following these simple tips, you can protect your sensitive information and reduce the risk of becoming a victim.