A taxpayer’s guide to identity theft and how to prevent it

Here's how to spot the signs of tax-related identity theft and the steps you need to take next

(Image: © ozrimoz / Shutterstock)

Tax identity theft happens when an identity thief (opens in new tab) manages to get hold of important information like your Social Security number and subsequently files a forged tax return (opens in new tab). Often, this will happen early in the tax season (opens in new tab), and in many cases, this occurs before the victim files their official return. Before the victim realizes the identity thief will have made off with their tax refund (opens in new tab), leaving them out of pocket financially and in emotional turmoil.

The situation has been exacerbated with the introduction of e-filing alongside the traditional paper filing procedure. This is because identity thieves can produce additional fake information to support their digital claims. And, because they are out of sight, they can better avoid being captured. However, help is at hand if, to start with, you invest in an identity theft software (opens in new tab) package.

Identity theft prevention software is widely available and very affordable, with options starting from just a few dollars a month. It's easy to tailor a package that suits your needs because everyone has different requirements. If, for example, you have a family, identity theft packages can also be used to cover other members. Investing a few hours into what to look for in a package is time well spent and could save you money in the long run.

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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 (opens in new tab) profiles to the claiming of expenses (opens in new tab) and the e-filing of our taxes plus all those other points in-between, there are more opportunities for identity thieves. 

Sometimes it might only be something simple that 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, over time you could start noticing unusual activity around your personal information. Remember that identity theft doesn’t only affect people in the run-up to tax filing time (opens in new tab)

It can happen to anyone and at any time too. Identity theft can cover insurance theft, bank account theft, and medical theft. If fraudsters can do something with your personal information and gain financially, then anything is possible.


(Image credit: TheDigitalArtist / Pixabay)

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 (opens in new tab) 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 (opens in new tab), 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 doesn't 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 have reason to 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 get in touch with 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 (opens in new tab), 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 (opens in new tab) frequently for any irregularities. Fraudsters may just be going after your tax payment, but if they have the right amount of information, they may well pursue your finances, set up credit cards in your name, and more.

If you've been careless with your Social Security number or have been unfortunate to mistakenly share it via something like a phishing email (opens in new tab), then it's also possible to contact the Social Security Administration. Try calling them on 1-800-269-0271 and explain what has happened. The sooner they can take action, and 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 (opens in new tab) to reduce the threat moving forward. And in the meantime, take a look at those identity theft protection (opens in new tab) packages, which will hopefully help you spot any potential hazards in the future.

Bryan M Wolfe

Bryan M. Wolfe is a staff writer at TechRadar, iMore, and wherever Future can use him. Though his passion is Apple-based products, he doesn't have a problem using Windows and Android. Bryan's a single father of a 15-year-old daughter and a puppy, Isabelle. Thanks for reading!