
How to Protect Your Identity and Money During Tax Season
It’s tax season in the U.S. You’re likely focused on gathering all the necessary paperwork and submitting your return on time. Meanwhile, in the criminal world, fraudsters are busy executing schemes in an attempt to steal your identity and money. In fact, the Internal Revenue Service identified $2.3 billion in tax fraud in 2020. To help alleviate some stress this tax season, we’ve compiled this guide to help you protect yourself, recognize possible fraud warning signs and take action if you become a victim.
LESSON CONTENTS
Know How the IRS Contacts You
Remember that the IRS will never initiate contact with you by phone, email, text, or social media. Additionally, the IRS won’t call, email or text you with threats of lawsuits or arrests, or to request your taxpayer PIN.
However, the IRS will contact you by mail. You can help verify the validity of the correspondence by checking if the letter arrives in a government envelope with the IRS seal, contains a notice number at the top right corner of the letter and provides the correct contact information for the IRS.
Take Preventive Measures
Use a PIN: The IRS now offers an identity protection PIN for all taxpayers who successfully verify their identity with the agency. The PIN helps prevent fraudsters from filing a return with your Social Security number (SSN) because it enables the IRS to confirm your identity when you file electronically or by mail. Only you and the IRS will have access to your PIN.
File early: The IRS only accepts a single return for each SSN. In addition to obtaining an identity protection PIN, submitting your return early can help further limit the possibility that a criminal may use your SSN later to file a false return.
Use secure filing websites: Only trust tax-filing portals with “https:” before the URL. This indicates that data transmitted between you and the site is encrypted.
Take advantage of multifactor authentication (MFA): When filing your taxes online, you should only use a tax service provider that, in addition to requiring a username and password, allows you to use another factor, like a one-time security code, to access your account.
Create strong passwords: For any portal that can access your sensitive tax information, make sure that you choose a lengthy, complex password that’s different from any others you use. Concerned about remembering so many passwords? A password manager can help you create and safely store your passwords.
How to Stop Scammers in Their Tracks
Beware of phony emails: Fraudsters create “phishing” emails that appear to be legitimate, but are simply a guise to get you to share personal or financial information. These emails may purport to be from the IRS and threaten you with legal or financial consequences if you fail to comply. Do not respond to such emails, click on any links, or open any attachments. Instead, report them to the IRS at phishing@irs.gov.
Verify payment instructions: If you owe money to the IRS, take the time to confirm the payment instructions directly with the agency through a verified phone number on the official IRS website, or a trusted individual such as your Financial Adviser. This is especially important when sending wire transfers.
Help the elderly: Cybercriminals often target senior citizens with tax fraud scams. Many of the scams involve fraudsters calling elderly victims to try to scare or intimidate them into acting on the spot. Make sure your senior family members are aware of such scams, and remind them that it’s always acceptable to hang up the phone, check in with a trusted partner and then call back using a verified number.
Recognize Tax Fraud Warning Signs
Cybercriminals are clever and relentless. Even if you follow these protective measures, you might still become a victim. To combat tax fraud, the IRS launched its Identify Theft Central portal, which contains helpful information for taxpayers. The IRS advises you to be suspicious about possible tax fraud if you:
- Receive a letter from the IRS about a tax return you didn’t file.
- Can’t electronically file your return because of a duplicate SSN.
- Get a tax transcript in the mail that you didn’t request.
- Receive an IRS notice about an online account being created in your name, or stating that your account has been accessed or disabled, when you didn’t take these actions.
- Get an IRS notice declaring you owe more taxes, or that you’re the target of collection action, when you didn’t file a return for that year.
- Receive an IRS notice reporting that you received wages or other income from an employer you didn’t work for.
Take Action
If you suspect that you’re a victim of tax-related identity theft, or know that your SSN has been compromised, the IRS suggests you should:
- Contact them immediately by calling the number on the IRS notice. Or, if you didn’t receive a notice, call the IRS Identity Protection Specialized Unit (IPSU) at 1-800-908-4490.
- Complete IRS Form 14039 (Identity Theft Affidavit) if your electronic return is rejected because of a duplicate filing under your SSN.
- Visit IdentityTheft.gov for more information.
- Read the Identity Theft Victim Assistance: How It Works
- Request a copy of the fraudulent return in your name (optional).
Keep in mind: Cybercriminals may also target your state income return. If you notice an issue with your federal return, be sure to contact your state tax department, too.
Related Resources
View AllHow to Spot Financial Grooming Scams
Scammers no longer rely on quick-hit phishing scams; instead, they patiently cultivate online relationships — a tactic investigators call financial grooming. This article unpacks how grooming scams unfold and the red flags to watch for. We also detail the practical actions you and your loved ones can take to shut fraudsters out.
How to Protect Yourself from Spear Phishing Attacks
Cyber threats have become increasingly sophisticated, targeting not just large corporations but individuals as well. Among these threats, the spear phishing attack is one of the most deceptive and damaging. So, what is a spear phishing attack, and how do you protect yourself?
Stay Safe in the End Zone: Avoiding Financial Scams During Football Season
Football season is a time for excitement, cheering on your favorite team, and creating lasting memories with friends and family. However, it's also a time when scammers are on the lookout to take advantage of distracted fans. From fake tickets to fraudulent online offers, football season provides scammers with numerous opportunities to trick unsuspecting victims. By staying alert and knowing how to spot common scams, you can protect your finances while enjoying the game.
Protecting Your Finances: Cybersecurity Best Practices
In today's digital world, protecting your finances has become more challenging than ever. With cybercriminals constantly devising new ways to access personal information and compromise accounts, it’s crucial to stay informed and practice good cybersecurity habits. Whether you're managing your finances online or simply browsing the web, knowing how to safeguard your data can prevent financial loss and protect your personal information from falling into the wrong hands.
Chip Card: What is an EMV Card?
Today, most debit and credit cards have multiple ways to transmit data and authenticate a payment. One such way is the small, square computer chips you see on the card. This is called an EMV chip and is used to help protect the user from fraud. Read this article to learn more about how EMV chips work and how they help keep your information safe.
EMV cards, often referred to as chip cards, represent a significant advancement in credit card security technology. The term “EMV” stands for Europay, MasterCard, and Visa, the three organizations that created the standard. These cards are equipped with a small, metallic square chip on the front, which is easily recognizable and distinct from the traditional magnetic stripe on the back of older cards. This chip is a critical component of EMV technology, designed to enhance transaction security and reduce fraud.
Bank Scams: What it is, how to prevent it & the different types
According to the Federal Trade Commission, there were 2.6 million fraud reports in 2023, with $10 billion lost to fraud. It can happen to anyone and is never something to be embarrassed about. It is important to recognize though that the first line of defense is you, so being prepared to safeguard your financial safety is crucial. If something happens, the sooner you reach out for help, the better position you’ll put yourself in.
How Can I Protect My Elderly Parent’s Money?
In today’s digital world, protecting your elderly parents’ assets is essential, as the consequences of financial vulnerability can be devastating. According to the FBI Elderly Fraud Report 2022, total losses reported by elderly victims increased 84% from the previous year to $3.1 billion.
Given the high stakes, you might wonder, “How can I protect my elderly parents’ money?” Navigating the complexities of financial security for elderly parents requires a blend of empathy, strategic planning and legal action. This guide equips you with the knowledge and steps necessary to secure your elderly parents’ financial well-being.
Avoiding Holiday Scams: From Phishing to Travel Frauds
The festive season is a time of joy, giving and celebration. But as you prepare to dive into the celebrations, you must be on guard against scams that could ruin your festivities. From convincing phishing emails decorated with jingle bells to too-good-to-be-true travel deals promising a winter wonderland, the tactics are endless and, sadly, effective.
Generally, financial institutions follow information security guidelines and never request personal or sensitive information. Therefore, any call or information request for your banking information, such as banking username and password, account number, routing number or social security number, should be treated with the utmost suspicion.
As technology evolves, scammers are getting more sophisticated. Some of their rackets appear genuine. Thus, you must be extra vigilant, especially during this holiday season. Here's a detailed overview to equip you against potential pitfalls.
Ensuring Member Data Security: How Credit Unions Safeguard Your Information
In an era marked by rapid technological advancements and the growing significance of data in various sectors, the safety and security of personal information have become paramount. Credit unions, financial institutions that serve their members' financial needs while operating as non-profit organizations, are no exception to this rule.
With the increasing reliance on digital platforms for banking and transactions, credit unions have taken robust measures to keep member data safe and secure. In this article, we explore the strategies employed by credit unions to protect their members' sensitive information.
What is Two-Factor Authentication (2FA)?
Two-factor authentication is a security process that requires two different authentication methods before granting access to an online account or system. Discover the benefits of two-factor-authentication and how to enable it to protect your information.
Navigating the New Normal: Software Updates and Working from Home
In our ever-evolving digital landscape, staying informed about software updates, and remote work safety is essential. As our lives continue to be shaped by technology, members must take proactive steps to ensure their financial well-being and data security. In this article, we'll explore the importance of software updates and discuss the challenges and benefits of working from home.
Guarding Your Finances: A Guide to Shielding Against Social Engineering and Phishing Attacks
In today's interconnected world, safeguarding your financial well-being requires more than just responsible money management; it involves protecting yourself from evolving online threats like social engineering and phishing attacks. This article aims to empower you with knowledge and practical tips to keep your accounts and personal information secure.