5 Ways to Protect Your Identity during Tax Season
Tax refund fraud is the biggest form of fraud the Internal Revenue Service deals with, with its own inspector general estimating the agency could lose as much as $21 billion by 2016. For scammers to perpetrate such fraud, they have to get hold of the information of legitimate taxpayers, which makes it extremely important for you to protect your identity during tax season. Here are five ways to do that.
1. Protect Your Documents
Even though electronic documents are becoming more and more popular every year, most tax documents still come through the mail. This can include your W-2 form, 1099 forms from freelance work or self-employment, and property tax and loan interest statements. By law, these documents have to be sent to you by Jan. 31, unless the issuer notifies you it will be late, in which case it must be sent to you by Feb. 15. Check your mail often during the last few weeks of January and early February, and promptly report any missing documents.
2. File Your Taxes as Early As Possible
A scammer can't file taxes fraudulently in your name if you've already done so, which makes it important that you file your taxes as soon as possible. Once you have all your documents, schedule an appointment to get your taxes done. The longer you wait, the greater the chances that someone can be successful filing fraudulently in your name.
3. Ensure Issuers Have Your Correct Address
If you have moved in the past year, you need to check with all of your tax document issuers to make sure they have the correct address for you. One of the easiest ways to have your documents stolen is to have them sent to the wrong address. If you move often, you might want to consider setting up a dedicated post office box and having your important documents, including tax documents, sent there.
4. Check Out Your Tax Preparer
If you do not use the same tax preparer every year or if you are forced to change tax preparers, make sure to thoroughly vet your new preparer. Among the things you should check out are whether the person has the licenses he or she claims to have. You also want to check with your local Better Business Bureau and search the person's background on the Internet and on social media sites. An unscrupulous tax preparer can easily steal your personal information.
5. Be Wary Online
If you receive any of your documents online or do your taxes online, you need to ensure you protect your information. This means ensuring your passwords are protected and changing them frequently. You also need to make sure you only send or receive information over secure wireless networks. Use only your home WiFi to work on your taxes. Also secure any websites you are using are secure. You can tell by whether they start with an "https" rather than just an "http."