We are seeing more and more instances of tax identity theft where scammers have stolen a taxpayer’s identification and filed a fraudulent tax return. They do this to collect refunds illegitimately. The best thing you can do to reduce this threat is to file early. If you file your legitimate return before the scammer can file a fraudulent return, you slam the door on that threat.
You should also protect your documents. It’s easy to just throw important documents in the trash, thinking no one will ever see them, but thieves do go through trash. You can protect your identity by shredding all important documents. You can pick up a personal shredder inexpensively but if you don’t have one, there are often businesses that will offer to take your documents and shred them, or some communities have shredding days where you can bring your documents to a central location and shred them for free.
Have you ever lost your wallet or pocket book? It is a big hassle to replace those credit cards and your drivers license. Do you carry your Social Security Card with you? It’s best to keep this information separate from your wallet because if it’s stolen, you won’t be issued a new Social Security Number.
Despite all your efforts to protect your identity, it’s virtually impossible to prevent every type of identity theft. The best thing you can do is periodically check your credit reports and make sure nothing is amiss. There are three major reporting agencies (Experian, Equifax, and TransUnion). Each allows you to check your report for free once per year, so you can contact them annually and get a copy. I suggest you stagger them and request one report every four months since in many cases, if something shows up on one report it might show up on the others. This gives you the opportunity to correct errors or spot identity theft early.
The biggest challenge is getting caught off guard by being careless. Take steps to protect your identity. If you do believe you’re a victim of a tax scam, you should alert the IRS immediately. They have several ways to help you. Go to identitytheft.gov for more information.
At Faw & Associates, we are always available to answer any of your tax or financial planning questions. We are accepting new clients please contact us for an appointment.At Faw & Associates, we are always available to answer any of your tax or financial planning questions. We are accepting new clients please contact us for an appointment.