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Tax day is months away, but take steps now so you can file your return early — before identity thieves beat you to the punch.
Many victims of tax-related identity theft uncover the fraud after they have filed their returns, leading to delayed refunds and additional problems with the IRS and Social Security Administration.
“One way to stay ahead of the bad guys is to file your taxes early, in January or February,” said Vicki Volkert, an Identity Theft 911 fraud investigator.
Here are some additional FAQs about tax-related identity theft from our experts:
Q: Why should I care about tax-related identity theft? I’m not a victim.
A: Tax-related identity theft is a growing problem that affects everyone — taxpayers, the U.S. government and, of course, victims themselves. The number of known incidents has increased more than twelvefold since 2008, according to a recent study from the U.S. Government Accountability Office. More than $5.2 billion of taxpayer money went to fraudsters who filed fake returns in 2011, the Wall Street Journal reported, and a watchdog agency claims that number is expected to reach $21 billion in the next five years. The costs are huge. And though you may not be personally affected yet, it could happen to you or someone you know.
Q: How does it work?
A: Tax-related identity theft usually takes one of three forms:
Q: How can I tell if I’m a victim?
A: Knowing you’re at risk is key. Telltale signs that you may be a victim of tax-related identity theft include:
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Q: How can I protect myself?
A: The best way to protect yourself is to file your taxes early. Beyond that, “it’s very difficult to protect yourself from this type of identity theft because there are no safeguards in place where they need to be, within the IRS,” said Raul Vargas, a fraud operations manager at Identity Theft 911.
Reduce your risk immediately by following these five basic best practices to safeguarding your personal information from identity thieves. To learn more about how to protect your tax information at home, online and when searching for a tax preparer or accountant, follow these additional tax tips here.
Q: I think I may be a victim of tax-related identity theft. What should I do?
A: Potential victims can follow these steps:
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Q: How long will it take for me to get my refund?
A: A few years ago, IRS identity theft investigations used to take at least six months and, despite the headache, most victims eventually would end up with their rightful refund checks. Now IRS investigations are taking more than a year and require victims to go through a lot of red tape.
Q: Where can I get more information about the IRS and tax-related identity theft?
A: The IRS has a lot of online resources, including these identity protection tips, a taxpayer guide to identity theft, and information about how to report it to its Identity Protection Specialized Unit.
Image: Denise Krebs, via Flickr
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