There are a number of reasons why it is wise to file your taxes as early as possible every year. For starters, the sooner you file, the quicker your refund (if you will be receiving one) will find its way into your bank account — money that many citizens depend on at the beginning of every year. Another reason to file early is the fact that the longer you wait, the more time you give an identity thief to file and collect your tax refund in your name, or using your Social Security number (SSN).
According to statistics from the Internal Revenue Service, thousands of citizens every year file their taxes only to be told that someone has already done so using their personal information. In most cases, the funds that the real tax filer would have collected had already been disbursed and the checks already cashed.
The best defense against identity theft is a good offense
Sharing your personal identification information with people — even close family members — can lead to trouble, so avoid it. In the majority of cases of identity theft, the criminals cashing in are relatives who have access to the SSNs and bank account numbers of loved ones. So only share information that could be used for tax purposes with either a trusted tax preparer or lawyer, and only if absolutely necessary.
Good organizational skills are an important part of protecting your identity
Do your best to conceal documents that may have personal information displayed on them. Items such as pay stubs or W-2 forms, for example, are necessities when it comes to filing taxes annually, so guard yours as best you can.
If you have a copy of your tax information on file, only keep a paper document and don't save it to your computer's hard drive. Should your computer ever get hacked, someone could access this record and use it to file your taxes next year, modify your income level and walk away with a hefty refund that, at least in part, belonged to you.
Not only could you lose your refund, but you may ultimately damage your credit score
Along with implementing good organizational skills when it comes to concealing your sensitive tax documents, enrolling in a credit monitoring program that will help keep an extra eye on your finances is also a good idea. You'll be alerted to certain activity going on under your name so you can investigate further whether or not this is the work of an identity thief who is damaging your credit score. After all, if you pay your taxes appropriately and have a pristine credit report, you should be able to collect a decent refund come tax season.