If you’re a US taxpayer and have to file your tax return (opens in new tab) every year, just like millions of other fellow Americans, then you’ll know how it can have its moments on the stress front. Although many of us are using accounts software (opens in new tab), which takes much of the effort out of the tax filing (opens in new tab) process, some prefer to go their own way and file manually, using the old-school paper and piles of receipts route.
Of course, there’s no problem filing your tax return either way, although whichever method you prefer there’s something else you need to keep a watchful eye on and that’s tax-related identity theft. While cases of identity theft aren’t hugely widespread they're still enough of a problem for the IRS to ensure that it needs to keep updating its advice on how to prevent it.
In the wake of identity theft on a wider scale, when it also includes criminals stealing your personal information in order to use credit cards in your name, open false bank accounts as well as plundering tax refunds (opens in new tab), there’s has been a surge in range of identity theft protection (opens in new tab) software. These packages can be a great way of helping to combat the problem of identity theft, but there’s a lot you can do yourself too.
- Check out the best identity theft protection (opens in new tab)
- The best tax software (opens in new tab) around today
- Take a look at the best accounting software (opens in new tab)
The big issue
Identity theft isn’t just about having your tax information (opens in new tab) stolen, although that’s certainly a big incentive for criminals looking to claim tax refunds. Fraud can happen across a variety of areas in your personal life, and identity theft can occur in relation to credit, finance, medical services and more besides. In fact, identity theft can affect just about any aspect of your life.
Naturally, if identity theft (opens in new tab) happens to you it can be hugely stressful and take some time to get things put straight again. While criminals can cause you a lot of hassle, there is also the financial aspect to take into consideration, especially if it affects something like your tax refund. If they get hold of your name, date of birth and the all-important Social Security number part of your personal identity (opens in new tab) then your tax refund could be the next thing they get hold of.
Spot the signs
While it’s possible to spot the signs of identity theft yourself, and the help of an identity theft protection (opens in new tab) package can certainly help, you may not always be aware it’s happening. Tell-tale signs that all is not well could include getting bills for items that you didn't purchase, or getting chased by debt collectors for accounts that you never even opened. You might also find you’re being denied loans if you’ve applied for any.
Depending on the identity theft that’s occurring you might only be subject to one of these thing, although in worst case scenarios you could find that all of the above are included in a more serious case of identity theft. Needless to say, if you have suspicions that anything like this is happening then you need to take preventive steps as soon as possible.
The other thing to consider is that potential victims of identity theft (opens in new tab) don't always have to be adults. In fact, both children and seniors can be particularly susceptible to identity theft. The big problem in the case of a child’s ID being stolen is that it can take several years before the issue is spotted, and can often be highlighted when the child becomes an adult and applies for things like bank accounts (opens in new tab) and loans.
Meanwhile, seniors can also be vulnerable to identity theft either because of their need to share personal information with more people, such as doctors and care workers, or through accidental slip-ups. Many people struggle with the digital world and some of us aren't always up to speed with the likes of internet security (opens in new tab) and being able to spot online scams (opens in new tab) that can appear in social media (opens in new tab) pages and email messages. Even those of us who are internet savvy can still fall foul of these risks.
With all of that in mind you might be feeling that preventing identity theft is a tall order. While it is a big problem, identity theft is being tackled on several fronts. The IRS, for example, has a raft of measures in place to combat it, and plenty of after-the-event support options to help if it does happen to you. The addition of an identity theft protection (opens in new tab) package is also a good idea and, depending on the package you choose, these have an array of tools that help you tackle ID theft.
A lot of the real preventative measures can be undertaken by you though, and many of them are pretty straightforward to implement. You’ll definitely want to take steps to ensure your Social Security number is kept well under wraps. Don't take it out with you or carry it in your purse or wallet for starters. And certainly don't give it out to anyone unless they can prove that there is a justification for doing so.
You should also make sure not to share other personal information without good reason. Key personal details such as your date of birth, full name, address, that all-important Social Security number and even any bank account numbers should not be shared. In addition, keep close tabs of your mail and be sure to take in post as it arrives each day. Similarly, keep an eye on bank statements and billing cycles. If anything doesn't seem quite right then contact your financial institution.
It’s really good practice to pick through your credit card and bank statements too, looking out for anything that doesn't look familiar. On top of that, if you’ve got paperwork that includes things like credit card or bank account offers then don't just toss paperwork into the trash.
Spend some time disposing of it properly, including using a quality paper shredder (opens in new tab) where possible, just to prevent anyone going through your trash in a bid to piece personal details back together. All these might seem like simple measures, but they can be highly effective just as long as you take the time to implement them.
- Check out our roundup of the best identity theft protection (opens in new tab)