Last updated on July 15th, 2022
In the last post of blog series “Tax Season 2018”, we have discussed how you can better manage your time and boost your productivity during tax season. Continuing in the series, in this post, we’ll discuss why identity theft is one of the key challenges for taxpayers, how they can avoid this and what to do after the identity is compromised.
Identity theft, being one of the most common scams in the US, has the potential to give you a headache and delay your refund. If someone uses your identity to file a fraudulent return, he wants to get your tax refund and does not intend to pay back taxes.
According to Government Accountability Office, the IRS mistakenly made more than $5 billion refunds to such thieves in the year 2013. As most refunds are worth hundred to thousand dollars, this is a huge number of false returns. Identity theft affects nearly thousands of taxpayers each year.
How to know if your tax account is affected?
You should be alert if you receive a message from the IRS or find from your tax professional that:
- A duplicate return has been filed in our name.
- Your account is showing a due balance or refund offset for the year in which you were not supposed to file the return.
- Your federal or state benefits are reduced or canceled because of income change report which you didn’t make.
- Information filed shows income more than actually earned.
- There are records of wages or income from an employer where you have never worked.
How to prevent identity theft?
The IRS is taking all the steps to prevent identity theft, but it’s not easy to catch such fraud on the spot. As you cannot always count on the organization to protect you, you will have to take precautions yourself.
1. Leave your Social Security Card home
Identity theft mostly involves SSN as it is used by the IRS and state tax authorities to identify taxpayers. The thief uses SSN to file a fraudulent return before you file it and then grabs the refund. To prevent this from happening, leave your SSN card at home especially during the tax season.
2. File early
Identity thieves usually strike early when the season begins. Once they have access to your SSN, they can easily file the tax return in your name. The purpose, obviously, is to take your refund. Try to file as soon as possible. The IRS will reject any duplicate filings once they receive a return with your SSN.
3. Secure your network
Do not use public wi-fi or any network that is not password protected to file your tax return. Most of these networks lack security protections which makes it easier for identity thieves to get access to your personal information. Always use a firewall and update your anti-virus software.
What to do if you are a victim of tax fraud?
If you receive notice from the IRS and suspicious of identity theft, respond immediately by calling them. If you didn’t receive any notice but think that you have been a victim, contact the IRS Identity Protection Specialized Unit at 800-908-4490 immediately.
Also, fill out Form 14039 and follow instructions related to particular circumstance. The form is used in instances where an event may make you vulnerable to identity theft including misuse of personal information or stolen documents.
Here are some recommendations from Federal Trade Commission for ID theft victims:
- File a complaint at identitytheft.gov website.
- Place an alert on your credit records by contacting major credit bureaus such as Equifax, Experian, and TransUnion.
- Call your financial companies and close any accounts existing without your approval.
How long will identity theft delay the refund process?
According to the IRS, the time taken to resolve such cases depends on the volume and complexity of the situation. In 2016, one of the victims said that it would take about six months to receive the refund.
According to the IRS website, most cases are resolved within 120 days but may take longer for complex cases. It also depends on whether you tell the IRS that you are a victim of identity theft or the IRS notifies you about suspicious tax return with your personal information.
The best tactic of keeping yourself safe from identity theft is to do everything in your power: file early, secure SSN, run up to date software, use anti-virus/anti-malware software, use a good password, and have backups of everything in your system.
In the next post of this blog series, we’ll share some tips on how you can have fun at work to reduce stress and improve productivity. Follow Ace Cloud Hosting on Twitter, Facebook, or LinkedIn and subscribe to the email newsletter to receive updates when the article goes live.
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