In the United States, there were ten million victims of identity theft last year, and many of these victims had their information compromised electronically. Cyber identity theft targets almost any document or website that may contain sensitive personal or financial information, and tax returns contain a great deal of both. If you submit your tax returns online or save a copy of your return on your PC, your return may be vulnerable to identity thieves. Mailed tax returns are not much safer; identity thieves can and often do steal mail quite easily. In this post, we'll describe how to tell if your tax return has been stolen and how you can prevent it from happening in the first place.
Although stolen tax returns often go undetected, there are several warning signs taxpayers can watch for. Here are a few red flags that your tax return may have been compromised:
You receive a letter or notice in the mail from the IRS. If the IRS receives more than one tax return for the same taxpayer, it will send you a notification in the mail. Typically, multiple tax returns indicate some sort of identity theft. Similarly, the IRS will notify you if you appear to be receiving wages from an unknown employer. In this case, an identity thief may have used your information in order to get a job and has filed taxes under your name.
You don't receive your refund. If your tax refund never comes, you should contact the IRS immediately. While the refund may just be delayed or lost in the mail, it could have also been diverted into another account by an identity thief. When thieves steal tax returns, they often alter the account information so the refund is electronically wired to their bank accounts.
You notice inconsistencies on your credit report. There is also the possibility that the thief did not steal your actual tax return, but did steal the information it contained. In this case, the thief could use the information to open credit cards, get jobs, and apply for loans in your name. Review your credit report for irregularities and, if you find any, consider your tax return as a possible source of the breach.
So many tax return thefts can be prevented with a few simple precautions. Here are some things you can do to reduce the risk of theft:
Don't store electronic copies of your tax return on your computer. Anything you store on your computer could potentially be accessed by an unauthorized party. Many tax returns end up in large online repositories for public viewing because identity thieves have sold them for money. Instead of keeping an electronic copy, write down your tax information and keep it in a safe or lockbox.
Shred unneeded tax-related documents. If you filed your taxes via mail, shred all documents that you no longer need after filing.
Don't respond to emails or unsolicited calls from the IRS. The IRS does not communicate via email and will not ask you to give your information out over the phone, so do not respond to these forms of communication.
Protect Yourself Against Identity Theft
Identity theft protection is important to maintaining your financial security. Here are some tips on how to maximize your defense against ID theft.
Enlist the help of professionals. Professional ID theft help is the best way to protect yourself against identity theft. Though you can take many preventive measures on your own, you have a much better chance of success if you recruit experienced and knowledgeable identity theft insurance professionals. It's true that most of the measures your ID theft protection company will take can be done by an individual, but few people have the time and effort required to do so.
Keep important documents under lock & key. If you have documents containing sensitive personal information, make sure you always keep them in a locked filing cabinet or safe of some kind. Document theft is still one of the most common causes of identity theft, so make sure your documents are not vulnerable.
Shred. Shredding is one of the best ways to prevent identity theft. Any documents you discard that have personal identifying information on them should be shredded. When you sign up for ID theft insurance, your shredding burden will be greatly reduced because we will take you off junk mail lists.
Proceed with caution on the phone. One very successful type of identity theft scam involves identity thieves masquerading as financial institution representatives or government authorities. Identity thieves then dupe consumers into revealing personal information. If you are ever unsure of the legitimacy of the call, don't take the risk and report identity theft immediately.
Guard your computer. Especially with the popularity of online banking and shopping, computers are a common target for identity thieves. Make sure your computer is password-protected. Keep your passwords separate from your computer.
Be careful on the Internet. Though most sites take adequate precautions for users' security, the Internet is not 100% safe. If you want to prevent ID theft, it's a good idea to minimize the transmission of personal information on the Internet. At the very least, make sure the sites you use are encrypted and secure. Another web-based identity theft solution is to avoid storing your credit card numbers and passwords to reduce your risk.