Identity theft is an increasingly common problem around the globe. If you’re affected, it can mean someone else might be using your personal and financial data without your permission for their motives. This can frequently involve applying for credit cards or removing funds from your bank account. However, identity theft can happen in another area concerning your tax affairs.
Criminals who gain access to your Social Security number and other personal details will likely use the information for evil reasons. One of the most common examples is filing a fraudulent tax return, which uses your Social Security number and associated personal data to file a fake return and subsequently pocket the money that would usually be returned to you. The best identity theft protection can help mitigate this problem, but there are also some key signs of tax identity theft.
Tax identity theft can have various implications, making it difficult to resolve. However, the IRS has implemented effective measures to assist you in case of such an event. Although the revenue service may detect fraudulent activity related to your Social Security account, it is also essential to take steps to safeguard yourself.
Spotting the signs
Cybercrime is rising, especially now that so many do tasks online. We need to be extra careful, particularly when e-filing our tax returns. If you try to file your return electronically and get rejected by the IRS, it could indicate that someone has already filed using your name and Social Security Number, a clear sign of tax identity theft. Even if you file your tax return by mail, you could still be a victim of this crime.
The IRS may send you a letter stating it already has a return in your name. Unfortunately, this also means that criminals have used your name and Social Security number, usually to try to get your tax refund. Another sign of suspicious activity involving your account is if the IRS informs you of a new online account created in your name on the revenue website.
Common sense
It is important to take measures to protect yourself from tax-related identity theft. One way to do this is by being cautious with your personal information. Don't share your Social Security number, address, birth date, or any other sensitive information unless it is absolutely necessary.
Scammers often use phony emails and phone calls to trick people into revealing their personal information. It is best to be wary of any unsolicited emails or phone calls, even if they seem legitimate. Always double-check the source of the email or phone call before providing any information.
Phishing emails are a common tactic used by scammers. They may pretend to be a trusted institution, like your bank, and ask you to click on a link and provide personal information. However, legitimate institutions will never ask you to do this. If you receive an email like this, delete it immediately.
By being cautious with your personal information and being on the lookout for scams, you can reduce your risk of tax-related identity theft.
Identity protection
If you want to ensure that your tax affairs are better protected, especially if your account has been compromised in the past, you can get an Identity Protection Personal Identification Number (IP PIN). It is a useful feature offered by the IRS that can help to lower the risk of tax-related identity theft.
The IP PIN is a six-digit number that is assigned to you by the IRS, and it needs to be used along with your other personal tax information when you file your annual income tax return. To get an IP PIN, you will need to sign up on IRS.gov to create an online account.
Taking steps
While it does involve another level of work, creating an online account and receiving the six-digit IP PIN can help keep your information much more secure. The IRS will always crosscheck any contact from you via the IP PIN, especially when it comes to tax filing time. It adds another level of security to proceedings, meaning more crucial information is needed on top of your Social Security Number, name, and address details.
Once you've created an online account with the IRS website, you'll find that the revenue service also offers an IPN tool, which will get the wheels in motion. Next, you'll need to tell the IRS your email address, give them your Social Security number or Individual Tax Identification Number, and let them know your mailing address, tax filing status, and a financial account number.
Naturally, check that the IRS.gov site is the official one if you're handing over this information, as the process involves revealing a lot of information about yourself. Although there are some hoops to jump through initially, the process is automatic once everything is in place. The IP PIN works for one year, with the same process applying if you want to avoid tax identity theft in the future too.
Prevention is always better than a cure, so as long as you're diligent and careful about who you share your data, the risk of identity theft is lessened somewhat. However, it's also good to know that there are some solid options if you are unfortunate enough to fall victim to criminals.
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
