Tax ID Fraud and How to Defend

Identity theft is often thought of in terms of credit scores and bank accounts, however, the same information used to meddle with your credit can be used to mess with your taxes. Getting jobs, filing returns, when hackers use your personal information in this manner, it is regarded as Tax Identity Theft. While the paperwork needed to correct this is a hassle in and of itself, the resulting delay in refunds could be detrimental for those enduring hardships.

Tax Identity Theft is when someone uses your information to change your tax records. Filing a tax return with your information results in them getting your refund, while they can also use your Social Security Number to get a job and claim income you never received. The latter often results in a higher tax bill leaving you in a debt you didn’t build. Knowing the signs, however, as well as quick action on your part, can resolve the problem and gets your refund to you.

Often not caught until filing a return, warning signs do pop up that can alert you to the breach. Receiving a 5071C is a pretty good sign something is up, as the IRS tends to send it out to verify identity when it suspects fraud. The IRS may have records that do not match your history, including employers you never worked for. Sometimes the IRS sends a notice claiming you owe extra taxes or a refund offset. If the thieves accessed your account virtually you will receive a notification from the IRS app when your name is used, or if they filed before you could you will not be able to file online. Unusual credit activity outside of taxes can also be a warning sign, as to access your credit implies they have your SSN.

When the early warning signs pop up, quick action helps resolve the issue quickly. When you receive a questionable IRS notice, a prompt response can quickly get you the refund you deserve. You’ll need to file some additional paperwork with the IRS, mailing in an affidavit using form 10439, and request a copy of the fraud claim with 4506-F. Filing a Theft Report with the FTC is also recommended, however that is available online unlike the IRS forms. Checking your credit activity, or even freezing your cards, until the IRS situation is resolved, as the thrives can use the same information to open credit accounts. Check with the Social Security Administration office to inquire about your number.

Preventing the problem before it starts is the best way to approach this. Filing your return early leaves less time for hackers and thieves to use your information. Once you have filed, any returns filed after you will be rejected, meaning even if they still tried to target you, the IRS will stop them and investigate the double claim.

Keeping your information safe is another great prevention method. Check out what Social Security Administration recommends for your SSN, and look into an Identity Protection Pin. Without this number, no one can file the return, including you. While previously reserved for those who have been victims of tax identity theft, starting in 2021 anyone can ask for one.

Filing your taxes can be confusing as is, but when you’re the victim of Tax Identity Theft, the process gets much more convoluted. Turning in your return early gives hackers less time to use your information, and there are extra security measures out there that prevent theft at the start. While it’s impossible to be completely safe from threats, this can help keep you better prepared and guarded against potential hackers and thieves.

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