4 Tips to Protect Yourself from Tax Identity Theft

It’s that time again…time to file your taxes if you’ve asked for an extension… And guess what?  Along with paying your taxes, it’s time to guard yourself and your money from tax identity theft.  So here is some info that will 

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How Bad is the Problem of Tax Identity Theft?

– In 2015 the Federal Trade Commission reported a 50% increase in identity-theft complaints; the vast majority of the increase involved tax refund fraud.  – That was four years ago I’m pretty sure the number has gone up

– The IRS paid out $5.8 billion in bogus refunds in 2013. – Geez, this is why we pay so much in taxes.

– Average IRS resolution time for people who have been affected stands at 278 days.

https://blogs.wsj.com/experts/2016/03/02/how-to-protect-yourself-from-tax-identity-theft/ – And I’m confident that it would be time-consuming, challenging, frustrating and I’m sure you can find your own adjectives to put here.

Now on to the good news.

Reduce Your Risk of Tax Identity Theft by Following These Simple Rules

Guard your EIN, TIN, and SSN as if it was your baby being attacked by a sea of Sharks

For all the people who send their information over email, keep in a drawer send it to anyone without it being secure.  You know who you are…yep, I’m calling you out.  The easiest way for a scammer to get your information is from ….

well, YOU….

Use a lockbox or safe to keep your personal information.  Don’t EVER send your personal information over Email. 

We’ve all heard about how Google, Facebook, and other tech giants read everything you write that would, of course, include private data but if you insist on sending it well, they can’t really be blamed.

On a side note if the person who is doing your taxes askes you to send them this information over email as an attachment…

FIRE THEM RIGHT NOW. 

Do not wait until the end of this article.

Then give us a call, and we’ll get your information over a secure portal, so you do not have to worry about this type of stuff.  (I know shameless plug right!)

Secure your Mailbox as if it was under a Terrorist Attack 

Ok, most business owners probably have someone sorting the mail but make sure they are doing it right away. If you find tax-related put it in a secure location where only one or two people have access to it.

Now for all you folks who have mailboxes and work inside your home.  Pick up your mail every day.  Put it in a central location and if you are receiving tax documents in a safe place until your ready to file. 

No not your kitchen drawer or your bedside table.  Actual a file cabinet with a lock will keep out most riff-raff if not your kids.

It’s Not the IRS

If you do receive a voicemail like the one at the beginning of the article or you receive something through email or social media that has the IRS logo.

 It’s NOT THE IRS!  

It’s just not.

 The IRS will never try to contact you by email, text, phone, or social media.  And they sure the heck won’t ask you for PINs, passwords, SSN or EIN, or any access information for a credit card, bank, or any financial accounts.  If you do get a letter from the IRS that you believe to be real, you can call them directly at 800-829-1040 to verify if it’s an actual document.

Everything else just delete, don’t open it. 

But if you do open it go to the IRS Identify Protection page to let them know you may have an issue.

You may not want to, but filing your taxes early minimizes the risk

 Not a very popular choice among my clients but if you can file your taxes early.  Early filing may prevent someone else filing under your name and redirecting your refund to themselves, or just filing a false tax that shows a refund that is not yours.   You do not want to give yourself a headache when you go to file your tax returns on April 15^th only to find out someone else beat you to it.  (This is for all the people who wait until midnight on April 15^th.

Security, Security, Security

Look I know it can be kind of a pain in the ass but installing an excellent firewall, and antivirus can help reduce the risk of identity theft.  Bite the bullet and secure your information.  There is plenty of good software out there, but if you don’t know consult with a security expert for your network, and if you only have a personal computer well it’s worth the money for peace of mind.

What to do if you are a victim of Tax Identity Theft

I can’t tell it won’t happen even if you follow the steps above but if you are a victim of Tax Identity Theft here are some resources to help you out

1. Report Your Identity Theft with the Federal Trade Commission
2. Contact one of the major credit bureaus, Experian, Transunion, or Equifax, and to place a fraud alert on your credit records.  They will alert the other two credit bureaus on your behalf. You may want to consider freezing your credit to prevent the identity thief from opening new accounts in your name
3. Call your bank or bank(s) and credit card companies that you have accounts and, they should be able to help you out by closing current accounts and opening brand-new ones.
4. Verify any IRS document you receive by contacting the IRS directly to see if it’s real.
5. Complete IRS Form 14039, Identity Theft Affidavit, if you efiled return rejects because of a duplicate filing under your EIN, SSN or TIN.
6. Check out the complete IRS guide on Tax Identity Theft

All Joking aside, Identity theft is getting even more prevalent in our society is more critical now than ever before to keep your documents secure.  Knowing some of the basics will reduce your risk, but if you are a victim, the best thing to do is stay on top of it.

Free Tax Preparation Checklist:  Get our “Tax Preparation Checklist” that helps you make tax season a breeze.

Putting it All Together

Now that you know how to protect yourself from tax identity theft go make sure they’re all in place.  We’d love to hear if these tips have helped you.

If your looking for some more tax information or strategies that can help you save big on your taxes check out the Big Fat List of Small Business Tax Deductions or the Complete Small Business Tax Preparation Checklist.