How to protect against Tax Identity Theft

What are you doing to prevent tax identity theft? Do you even know what steps to take? You’d better, because this crime has tripled since 2010, says the FTC.

A report on foxbusiness.com describes tax identity theft as the act of stealing someone’s personal information, then the crook files a phony tax return in the victim’s name to get a refund. The victim will never see it in their mailbox. And that’s only the beginning of the victim’s problems.

First, your complaint that you didn’t get your check will fall on deaf ears; the IRS will think they already sent you the check. Remember, the thief posed as YOU. You then must:

• File a form explaining you’re a victim of tax ID theft.
• Provide proof that the SSN is yours.
• Your complaint will be reviewed, delaying your refund for months.
• But the game’s not over. The thief didn’t report the income you made on the side teaching group fitness classes. You’re now being charged by the IRS with a tax deficiency.
• The snowball just keeps getting bigger: The thief may have enough information on you to open credit cards in your name and suck dry your bank account.

How to Protect Yourself

• Guard your personal information. Never give out your Social Security number (job application, yes; sweepstakes contest, no; to someone over the phone, no).
• Memorize your SSN and keep your SSN card in a locked place at home.
• Buy a shredder and make a habit of shredding all personal and financial documents.
• If you do your taxes yourself, your computer should have encryption software. Never use public (non-secure) Wi-Fi for any tax related transactions; cyber thieves could “see” your data transmissions.
• When it’s time to mail in the return…do it inside the post office, never at a public mailbox or even your home mailbox.
• If you can’t do your taxes, get them done by a reputable outfit. You may want to go with someone who’s done the taxes for years for one of your family members or close friends.