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Don’t wait. Identity theft can happen when you least expect it.

What is tax identity theft?

Ever heard the saying, “Early bird gets the worm?” It can be said for a number of things — trying out a new brunch place in town (without a wait!), getting that morning workout in, and... filing your taxes.


We’re not just saying that so you get your tax refund faster, either. It’s actually to help avoid tax identity theft. That’s right: fraudsters will go out of their way to file your taxes for you, but trust us: they’re not doing you any favors.


Keep reading to find out more about tax identity theft, how it happens, and why you should consider filing well before April 15 (if you can).


What is tax identity theft?

Tax identity theft is when someone uses your personal information (namely your Social Security number) to file a tax return in your name.


How does tax identity theft happen?


A tax identity theft scam, or W-2 scam, can happen if, say, a cybercriminal hacked into an executive’s email account and sent communication from that alias targeting your HR or payroll department. The email would request files of W-2 forms of some or all of your company’s employees. Then they’d attempt to file fraudulent tax returns to receive your much-anticipated refunds.


However, you may have a feeling that your savvy HR department wouldn’t fall for this trick — and if that’s the case, how else can it happen? Here are a few other ways:


  • A data breach

  • Stolen mail or W-2s (yes, fraudsters will dumpster dive)

  • Corrupt insiders/tax preparation services

  • Unsecured and public WiFi hotspots

  • Social Security numbers that have been lost, stolen, or compromised


The signs of tax identity theft

If someone decided to file your taxes in your name, the IRS (Internal Revenue Service) likely wouldn’t call you on your lunch break to say you’ve been a victim of tax fraud. Not only because the news is sure to make you lose your appetite, but because it’s a much more complicated issue at hand.


What will usually happen is that when you file your legitimate tax return, the IRS will reject it because one (the fraudulent one) has already been filed. If you file by mail, the IRS will mail you a letter explaining they received more than one return in your name. The letter will have step-by-step instructions on what to do next.


But if you file online or through a tax preparer, the IRS will reject your tax return upon submission. If that happens, visit identitytheft.gov and report it. (Just like the letter for mail-in filers, the website will offer instructions on what to do next, too.)


As you’re gearing up to file, you might notice some other suspicious signs of tax fraud. The IRS recommends being on the lookout for these situations:


  • You can’t e-file your tax return because of a duplicate Social Security number.

  • You get a tax transcript in the mail that you did not request.

  • You get an IRS notice that an online account has been created in your name.

  • You get an IRS notice that your existing online account has been accessed or disabled when you took no action.

  • You get an IRS notice that you owe additional tax or refund offset, or that you have had collection actions taken against you for a year you did not file a tax return.

  • IRS records indicate you received wages or other income from an employer you didn’t work for.

  • You’ve been assigned an Employer Identification Number but you did not request an EIN.


How to prevent tax identity theft

Tax identity theft can happen to anyone — even if you’re super careful. But knowing the signs can help you stop a scam in its tracks, as well as doing what you can to prevent it from happening.


File your tax returns as early as possible.

We know, this probably isn’t what you wanted to hear. But as soon as you have all the documents you need to file, you should go ahead and get it done. This is simply so an identity thief doesn’t get to file in your name first. The consolation prize? You’ll likely get your tax return quicker.


Protect your personal information.

Make sure your personal information stays rightfully yours by:


  • Leaving your Social Security card or Individual Taxpayer Identification Number card in a safe place at home. (This also includes documents that contain this information on it.)

  • Avoid opening suspicious email attachments or clicking on links from senders you’re not familiar with, especially if your employer sends your W-2 electronically. Double-check with your HR or payroll department to ensure you’re aware of how they’ll send it out.

  • Don’t file your taxes on a public or unsecure WiFi network. (That includes your favorite coffee shop.)

  • Update your passwords regularly.


Choose a tax preparer you can trust.

If you’d prefer to do your taxes yourself, you can take advantage of one of the many free online tax preparation software options out there. Not sure where to file? Check out Credit Karma, H&R Block, and IRS Free File.


But if you’d rather leave it to the pros, make sure to do your research beforehand. Some accountants can easily be swayed by fraudsters willing to pay the big bucks for your information — or be a fraudster themselves. Be wary of those promising bigger refunds — they could be making questionable deductions that make the IRS suspicious.


Our top tip? Look for a CPA, or Certified Public Accountant. They’re the real pros.


Consider identity theft protection.

In partnership with Experian®, one of the three major credit reporting agencies, Kasasa Care offers three tiers of identity protection — featuring all-in-one credit, identity, and restoration services. Plus, the service monitors over 600,000 pages and millions of data points (including on the dark web). So even when it’s not tax season, you’ll be the first to know if your Social Security number, name, birthdate, address, and more are found where they shouldn’t be.


And if you do unexpectedly find your information in the hands of a fraudster — have no fear. With every tier of identity theft protection, you get access to 24/7 full-service restoration, lost wallet protection, and a Limited Power of Attorney to complete all restoration services on your behalf. Talk about reclaiming your identity... and your time. It all starts at just $8 a month. Start comparing identity protection plans from Kasasa Care and Experian here!


What to do if you suspect tax fraud

Even if something seems suspicious, the IRS recommends continuing to pay your taxes and file as normal. (In other words, tax fraud isn’t going to get you out of doing your civic duty.) This is to make sure you’re not subject to penalties. The IRS will be able to determine — after a fraudulent activity occurred — the differences and ultimately send you the correct tax return amount back. And, you know, go after the fraudster.


It’s also recommended to place a freeze or fraud alert on your credit reports. This is completely free and will require creditors to take extra steps to verify your identity, restrict access to your credit report, and generally make it difficult for fraudsters to do anything sneaky in your name. (We have a feeling they don’t have much patience and will move onto their next victim pretty quickly.)


If you’d like to request a fraud alert or credit freeze, you should contact each of the three national credit reporting agencies directly.


  • Equifax: Online or call 1-888-766-0008

  • Experian: Online or call 1-888-397-3742

  • TransUnion: Online or call 1-800-680-7289


Though tax fraud is serious, it’s nothing to be scared of — especially when you know about the resources available to help prevent it from happening.


The biggest takeaway we hope you’ll put into practice is to file your taxes as early as you possibly can, and to consider an identity protection plan, powered by Experian. This is the easiest way to prevent tax identity theft, so the fraudster can get that dreaded letter in the mail instead of you. Happy filing — and dreaming about how you’ll use your refund check!

Tags: Protection, Identity, Care

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