How to protect yourself from tax refund theft
It’s tax season, and many Americans are anticipating their refund like a hungry dog pining for table scraps. But sometimes, things can go wrong. If it isn’t Uncle Sam reaching in to take away your refund, it’s someone with identity theft on the brain. Tax refund theft is a growing problem. Here are some ways you can protect yourself.
Tax refund theft – How it works
According to a U.S. Government Accountability Office report filed in Dec. 2012, the Internal Revenue Service noted 641,690 cases of tax refund theft (aka tax ID theft) during the first three quarters of the year. That was a 62 percent jump up from 232,142 cases over the same period in 2011. In these cases, an identity thief literally uses your tax ID to fraudulently file income tax returns so that they can claim your refund. Any organization that keeps Social Security numbers, such as schools, banks or employers have computer systems that can be hacked.
Tax refund theft protection step No. 1 – Protect your Social Security number
Don’t carry your Social Security card or related documents in your wallet. And don’t be so quick to divulge that number to just anyone. If you can apply for that loan or service without divulging the number, then don’t give it.
Tax refund theft protection step No. 2 – Watch your credit report
Use AnnualCreditReport.com each year to get a free copy of your credit report. If you suspect identity theft has occurred, however, then sign up for a monitoring service that informs you when major changes occur. Equifax, Experian and TransUnion all have something of this nature available to the public.
Tax refund theft protection step No. 3 – Lock up financial documents
One of the primary ways identity thieves work is by retrieving sensitive documents from your garbage. Don’t throw out financial documents. Don’t even shred them and throw them out, unless they’re so shredded that they cannot be reassembled or are burnt beyond recognition. Keep them in a file in a safe if possible. Make sure that if you have one, your accountant keeps data safe, too.
Tax refund theft protection step No. 4 – Protect your PC
Make sure that your computer is protected with a firewall, antivirus and Trojan-sniffing software. That will help provide baseline protection. However, the most important way to protect sensitive financial data while online is to avoid divulging information unless you’re absolutely sure of where the information is going. Phishing attacks are notorious for tricking consumers into revealing information, where identity thieves post as the consumer’s bank or related entity.
Tax refund theft protection step No. 5 – Don’t reveal sensitive data over the phone
Whether the person you’re speaking with is hiding their identity thief nature, or someone is intercepting your wireless phone conversation, the telephone is where some consumers lose the privacy battle. Be cautious before giving up sensitive bits of data.
Tax refund theft – What to do if you’re been victimized
If you become a victim of tax refund theft, contact the IRS and police immediately, as well as the Social Security Administration and the three major credit bureaus. If the thief has already filed a return and collected your refund, it may take as long as a year to resolve the problem.