The most common identity theft risks at tax time
Tax time is always tough. Whether you will owe or anticipate a refund, plan to do your own taxes or pay a professional to do them for you, preparing and filing your taxes can be a tedious task. It can also be a risky one: the information needed to prepare your taxes is a treasure trove for enterprising identity thieves.
The nonprofit Identity Theft Resource Center notes that for identity thieves, "tax time is a prime time of opportunity." Forms such as W-2s and IRS tax forms usually include your Social Security number, name and address, and often, financial account information, the ITRC notes. Using that information, identity thieves can access your existing financial accounts, open new lines of credit and commit other acts of fraud.
It's important to keep identity protection front-of-mind during tax preparation season. Take steps to protect yourself against these six common identity theft risks during tax time:
- Stolen tax documents - Your tax forms contain a wealth of personal information. Important documents such as W-2s and interest statements begin to arrive in the mail in January. Theft of these forms could be disastrous. If you don't already have one, consider investing in a locking mailbox or renting a secure post office box. Avoid leaving incoming mail sitting in your mailbox for any length of time, and always take outgoing mail directly to your local post office branch.
- Unsecured documents - Once you've retrieved these documents from the mailbox, don't let security lag. Never leave sensitive documents lying around in plain sight in your vehicle, home or workplace. Keep documents in a locked safe or file cabinet.
- Phishing scams - Identity thieves often prey on tax-time anxiety by sending emails or making phone calls that purport to be from the IRS or other federal agency. These tactics are designed to bilk you out of sensitive information. It's simple to avoid these scams: ignore all such communications. The IRS uses good old-fashioned snail mail - never email, text messages or phone calls - to communicate with tax payers. If you suspect you're being scammed by someone posing as an IRS representative, report the incident to the IRS by forwarding suspicious emails to email@example.com.
- Sloppy CPA - You hire a tax preparer to help ensure you get the maximum return or minimum payment - and that you don't run afoul of complex tax laws. Yet your tax preparer can cause you problems if he or she fails to properly safeguard your documents. Be cautious when hiring a tax preparer - only work with someone you know or whose reputation you've investigated. Ask who will have access to your documents and how your preparer will keep your forms and information secure.
- Slipshod storage - Everyone knows you have to hold on to tax documents. In most cases, you should keep tax returns and supporting documents for at least three years from the date of filing. Keep forms in a secure, locked location - or store them digitally in password-protected files. When it's time to dispose of documents, shred them with a cross-cut shredder before getting rid of them.
- Failing to monitor your identity - Keeping an eye on your credit and financial accounts is the single most proactive step you can take to protect your identity at tax time - and throughout the year. Check your credit report before and after tax season, and several times throughout the year. Consider enrolling in a comprehensive identity theft detection, protection and resolution product as well.
GateHouse News Service