Paying taxes is inevitable. It is what helps run the country. You can use tax services to help you do your tax accounting and pay them timely. However, it would be best if you safeguard your identity while doing this to avoid paying fines or missing your refunds. Tax identity fraud is when a thief uses someone’s personal information to file a fraudulent tax and gets a refund. So, identity theft protection becomes a vital subject if you do not want to lose your hard-earned money.
You often don’t get to know this until you try to file your taxes and realize that someone has already filed it. You’d be surprised to know that at least 1.4 million identity thefts occurred in 2021, of which 45% were tax identity thefts. That’s why it is crucial to safeguard your identity and prevent tax identity theft that can make you lose your refunds.
So, how can identity theft be prevented?
Top 9 ways to prevent tax identity theft
With tax identity theft becoming frequent, the essential question is – can identity theft be prevented? It is necessary to protect yourself to avoid missing out on refunds and tax credits. Generally, a tax identity theft occurs when a thief uses your social security number for employment or obtains enough info to file returns as a different person.
And when you try filing your tax, you only know it gets rejected. It can be harrowing. So here are the top 5 tips to prevent being a victim of tax identity theft:
1. safeguard your social security number
The foremost step to identity theft protection is safeguarding your social security number. It means you must ensure you don’t give your social security number to anyone. Ask every time the reason why anyone needs the SSN. If necessary, always find out whether there are any protection measures for the same.
Avoid carrying your card with you when not necessary, and store it securely to prevent it from being mugged. Additionally, ensure you shred any paperwork that has your social security number.
2. file taxes early
Another way to avoid tax identity theft is to file your taxes early. That way, a thief won’t be able to use your identity to file taxes and steal your refund and credit. Moreover, if you notice someone has filed a fraudulent return, ensure you fill out Form 14039 to process your return.
Additionally, filing your taxes early, say by January end, will reduce tension and prevent fraudulent filing from your account.
3. be aware of scams and phishing
Tax identity thieves are notorious for using scams and phishing tricks to get their hands on your information. Therefore, you must be aware and ensure you don’t give your details to anyone at any time without any cause. Moreover, in the digital world, you find thieves trying to get your information by claiming you won the lottery or other prize money.
Furthermore, thieves may impersonate IRS officers and ask you for details over the phone or by email. Ensure you don’t fall for it and check for proof if anyone asks you for your personal information.
4. change your passwords often
Tax identity thieves get your information from multiple sources. Often, they create genuine-looking emails and trick you into providing your login credentials. Unfortunately, it’s an easy trick that gets your personal information when you have had the same password for years.
Ensure you change your password every 90 days and use a different password for different accounts. Moreover, choose a strong password with characters, numbers, and capital letters.
5. use alerts
Tax and finance institutions have systems to alert you when fraudulent transactions occur. However, you need to sign up for the alerts to ensure you get them. So, research and sign up at the right place to get regular alerts.
You will be alerted if someone tries to file taxes using your social security number and take quick action.
6. collect your mails
While we live in a digital age, much formal work is still done through physical means. So don’t assume that identity theft protection should only be tech-related. For example, several sensitive documents like credit card statements, tax forms, utility bills, credit offers, healthcare forms, etc. come home through physical mail. And these documents can help scammers steal your identity and tax returns.
Make sure you collect your mail yourself daily. If you are using a mailbox, only use a US-Postal Service-approved lockable mailbox. Sign-up for the Informed Delivery through USPS. And the most crucial thing to remember is to submit a change-of-address request as soon as you shift to a different place.
7. start shredding
Any document or report that may not be required later should not last on your desk longer. Before anyone could use these documents, such as pre-approved credit offers, credit card statements, IRS correspondence, etc., shred them. Dumpster diving is an old-school technique to steal your personal information.
You may keep some documents for a couple of months in a safe. However, shred every paper containing your personal and banking information as soon as it’s out of use.
8. check your financial reports & medical statements
Some of the most common ways of identity theft are credit card fraud & healthcare fraud. Therefore, you need to check your financial statements regularly and carefully. Ensure every transaction is within your knowledge.
You can access your annual credit card reports from Equifax, Experian, or AnnualCreditReport.com. Besides, make sure you get notified of every transaction or change so that if there is anything fishy, you report it on the spot.
9. secure your devices
Online usage of credit cards is increasing by the day. In addition, your banks provide internet banking services leading to more mobile or computer-based transactions. But unfortunately, it makes your bank accounts and credit cards vulnerable to hackers.
Ensure the computer you use has antivirus software installed that prevents hackers from accessing your personal information. In addition to it, always use two-factor authentication to access your devices and accounts. It adds a layer of security to hacking-related breaches.
Identity theft protection is crucial to ensure you get the refunds that are due to you. Moreover, ensuring you are paying only the taxes you owe is vital. Some ways to avoid tax identity theft include freezing your credit, safeguarding your social security number, using alerts, using a digital wallet, changing your passwords often, filing your taxes early, etc.
If you have trouble filing your taxes or want to avoid identity theft, you can use tax services like Stamos and Stamos Certified Public Accountants Inc. They are the best-outsourced CFO service providers and are professional tax accounting people. They will help you plan your financial future, file taxes, and support your financial goals.
So, get in touch without any delay!