It’s that time of year when employers and financial institutions start sending you W-2s, 1099s, and other tax forms for 2024. Unfortunately, there are bad guys out there who are hoping you get a refund … so they can steal it. During this Tax Identity Theft Awareness Week, make sure that your refund gets deposited into your bank account!

What Is Tax Identity Theft?

Identity theft occurs when someone uses your personal information (like your name, Social Security number, or credit card number) without your permission to open new credit cards, get loans, or finance purchases while pretending to be you.

Tax identity theft is a variant of identity theft in which someone uses your Social Security Number (SSN) to file a fraudulent tax return. They then have the refund deposited into an account they have set up. Most people don’t even realize it’s happened until they go to file their taxes, and it gets rejected because a return has already been filed.

How Tax Identity Theft Happens:

Tax identity theft happens in much the same way that traditional identity theft occurs, with a few special extra tricks up their sleeves.

• Phishing scams: Emails, texts, or phone calls pretending to be from legitimate organizations can trick you into providing personal information.  
• Data breaches: When a company storing your personal info has a security breach, your SSN and other personal details can be nabbed by hackers or sold to criminals.
• Stolen mail: Thieves know that you’re receiving mail containing tax forms or other sensitive documents with your SSN on it.  
• Unsecured Wi-Fi networks: Using public Wi-Fi without proper encryption to access your personal financial information makes it vulnerable to interception.
• Dishonest tax preparers: Unfortunately, a tax preparer can intentionally misuse your information to file a fraudulent return.

What to Do if You Are a Victim of Tax Identity Theft:

The good news is that you can still get your refund, even if someone has filed a tax return under your name. The bad news is that it’s a whole process, and you are still at risk for further theft. But you can stop them in their tracks if you act quickly.

• Contact the IRS immediately: Immediately report the fraudulent return to the IRS. You’ll likely need to file Form 14039, Identity Theft Affidavit, and provide the necessary documentation to verify your identity. Your refund will be delayed while the IRS investigates.
• Place a fraud alert on your credit report: Notify a major credit bureau to monitor your credit for suspicious activity. (They’re required to forward the alert to the other two bureaus.) A fraud alert means that a business must contact you before it issues new credit in your name and you are entitled to an extra free credit report. An extended fraud alert lasts for seven years.
• File a police report: If money has actually been stolen, filing a police report may be necessary. The report will document the theft and serve as evidence of the crime. This is important when completing a fraud affidavit or disputing a debt, so you won’t be on the hook for the charges.
• Get a recovery plan from the FCC: Go to identitytheft.gov to report identity theft. They’ll ask you some questions about your situation and create a personalized recovery plan. They can even track your progress, update your plan as needed, and pre-fill forms and letters for you.
• Monitor your bank and credit card statements: Check your statements carefully each month to identify any unfamiliar transactions. If you see unauthorized charges, you will need to get new credit or debit cards issued, or even have your account numbers changed.

Protect Yourself From Tax Identity Theft:

An ounce of prevention is worth five pounds of cure when it comes to tax identity theft! Here are our top tips for keeping yourself safe.

• Be cautious with personal information: Never share your SSN or other sensitive details unless absolutely necessary. Note that the IRS, banks, and other financial institutions will never call or email you and ask for your SSN.
• File your taxes early: Filing your tax return early can help prevent someone else from using your information to file a return. Beat them to the punch!
• Grab your mail promptly: Don’t let mail sit in your mailbox for several days, especially in Jan. – early Feb., when tax documents are being mailed to you.
• Shred important documents: Properly dispose of documents containing personal information before discarding them.
• Use strong passwords: Protect your online accounts with strong, unique passwords. Use a different password for every account. Storing them in a password manager like Pitt Password Manager (LastPass) can help you keep track of them all.
• Monitor or freeze your credit: Regularly review your credit reports (yearly, or more often if you suspect identity theft). Even better, freeze your credit until you need to open a new credit card or apply for a loan/financing plan.

Stay Safe This Tax Season

Take steps to safeguard your SSN and other sensitive information to stop identity thieves. That way, you can be sure your tax refund ends up where it should – in your bank account!

-- By Karen Beaudway, Pitt IT Blogger