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The Resource Center Identity Theft & Protection The Resource Center | article

How to Best Protect Your Tax Refund This Year

how to best protect your refund this yearIf you’re expecting a tax refund this year, you’re probably planning on filing as soon as you have all the requisite paperwork in order. But be aware: tax fraud is becoming increasingly feasible and common, and you’ll need to be vigilant to protect yourself and ensure that you get all the money that you are legally owed.

How do thieves commit tax fraud?

There are two main ways that thieves might try to steal your tax refund.

The first is the simplest: they will physically take it from your mailbox when you are not looking. If they act quickly enough, they can take the envelope and be long gone by the time you realize that your check hasn’t arrived.

The second is more complicated, but is also growing more prominent and gaining more attention from government officials and law enforcement. Rather than steal a check from your mailbox, thieves will attempt to steal some of your personal information and use it to file a tax return in your name. If it works, they get your check and you won’t realize that anything is amiss until you attempt to file yourself. It can take months to sort out this issue with the IRS.

How can I protect myself?

If you suspect that you might be defrauded this year, or even if you just want to be more secure, there are some steps you can take to reduce your risk.

First, file your tax return as early as you can. Some companies may take longer than others to send out W-2s, 1099s and other important forms, but an increasing number of companies offer the option of receiving these via email. The sooner you get this task done, the less time you are giving thieves to take advantage of you.

The IRS also offers tools that taxpayers can use to track their returns, such as the “Where’s My Refund” website or the IRS2Go app. This is particularly useful if you are expecting your refund in the mail. However, you can also receive your money through direct deposit, which eliminates the risk of someone stealing a check out of your mailbox.

For additional security, the IRS now allows taxpayers to create identity protection PINs, which are then required to e-file a tax return. These unique numbers are only good for one year, and add an extra step that makes it more difficult for thieves to file a return under your name.

Precautions aren’t always enough

While there are many things you can do to reduce your chances of becoming a victim of identity theft, nothing is guaranteed. It is also important to prepare a response in the event that you are impacted. The IRS has some instructions for taxpayers who have had their refunds stolen that you can check out here.

Tax fraud and identity theft often go hand in hand and while no one can guarantee your identity or tax refund will be safe an identity theft protection service can help you keep what’s yours. Services like this monitor your credit file, Social Security Number and public records and can notify you of certain activity that may indicate fraud. They also have agents that can walk you through recovery should your identity become compromised.