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Protect Yourself from Tax Refund Fraud: Tips and Tricks

Preventing Tax Refund Fraud

Tax refund fraud is a serious issue that affects millions of Americans every year. Identity thieves use stolen personal information to file fraudulent tax returns and claim refunds, leaving victims with a headache of trying to recover their hard-earned money.

However, there are steps that can be taken to prevent tax refund fraud from happening, which we will explore in this article.

Be Vigilant Year-Round

The first step in preventing tax refund fraud is to be vigilant year-round. Identity thieves are always on the lookout for personal information that they can use to commit fraud, so it’s important to always keep an eye on your personal information.

Keep track of your financial accounts, monitor them regularly, and report any unauthorized activity immediately. Check your credit reports for errors or fraudulent activity.

By catching fraudulent activity early, you can prevent it from spiraling out of control.

Never Respond to Suspicious Contacts

It’s important to know that the IRS will never contact you by phone, email, or social media to request sensitive information such as your Social Security number or bank account details. Scammers often pose as IRS representatives to trick victims into giving up their personal information.

Always be suspicious of any unsolicited calls, emails, or messages that request personal information and never provide it.

Protect Personal Identity Information

Identity thieves use many tricks to get access to your personal information, including phishing scams that pretend to be legitimate organizations such as the IRS or your bank. Always verify the authenticity of any communication before responding.

Be wary of offers that seem too good to be true as they may be scams. Protect your Social Security number and other sensitive information by using security software, changing passwords regularly, and being careful with who you share your information.

Check Credit Report Regularly

Checking your credit report can help you detect any fraudulent activity early. It allows you to detect any accounts, loans, or credit cards that have been opened in your name without knowing.

If you detect any fraudulent activity, you should report it immediately to both the credit bureau and the creditor. Consider enlisting the help of a credit-monitoring service that can alert you to changes in your credit report and other suspicious activity.

Don’t Ignore Tax Documents Received

Some identity thieves may steal your W-2 to file a fraudulent tax return in your name. This is one of the most common ways that personal information gets stolen.

Always ensure that you receive your tax documents on time and that they are correct. If you do not receive your tax documents or believe they are incorrect, reach out to your employer or the issuing authority immediately to confirm and resolve the issue.

File Tax Return Early

Filing your tax return early can help prevent identity thieves from filing a fraudulent return and claiming your refund before you do. It gives you time to gather receipts and other documents that you need to file your return accurately.

Early filing can also help you avoid rushing to meet the deadline and making errors that can delay your refund.

Get an Identity Protection PIN

The IRS Identity Protection PIN is a six-digit code that adds an extra layer of security to your tax return. It helps prevent identity thieves from filing fraudulent tax returns in your name.

You can obtain an IP PIN by opting-in at the IRS website. Once obtained, you will be required to use the IP PIN every year when filing your tax return.

Recovering from Stolen Tax Refund

If you fall victim to tax refund fraud, it’s important to take action immediately to minimize the damage.

Report Tax Fraud

Reporting tax fraud to the IRS through Form 14039 or an identity theft affidavit is the first step in correcting the problem. You should also file a duplicate tax return to claim your refund, using the correct form provided by the IRS.

Respond to Notice from IRS

The IRS provides specialized identity theft assistance, so once the crime has been reported, they will provide instructions on how to proceed. You should respond promptly to any notice you receive from the IRS as it contains important information on how to move forward.

Alert Financial Institutions

Notify your financial institutions immediately if you suspect you are a victim of identity theft. They may need to freeze your accounts or change your passwords to prevent further unauthorized access.

Monitor your accounts regularly to ensure that no unauthorized transactions occur.

File Complaint with Federal Trade Commission

File a complaint with the Federal Trade Commission to document the identity theft. FTC provides specialized services to victims of identity theft that can help them remedy the issue.

Put Fraud Alert on Credit Records

Consider placing a fraud alert on your credit records, so any lenders planning to extend credit in your name will be required to verify your identity first. A fraud alert must be placed with all three credit bureaus – Equifax, TransUnion, and Experian.

Consider Filing Credit Security Freeze

A credit security freeze restricts access to your credit report, so lenders are unable to view it. This can prevent identity thieves from opening new accounts in your name.

You can place a security freeze on your credit report by contacting each of the three credit bureaus. In conclusion, tax refund fraud is a serious issue that you can prevent by taking actions such as being vigilant, protecting your personal information, filing your tax return early, and getting an identity protection PIN.

However, if you fall victim to tax refund fraud, it’s important to take corrective action immediately. Report the fraud to the IRS, alert your financial institutions, file a complaint with the FTC, and consider placing a fraud alert or credit security freeze on your credit reports.

Following these measures can help protect your identity and financial well-being. Tax refund fraud is a serious issue that can lead to significant financial losses.

To prevent such fraud, it is crucial to be vigilant and protect personal information year-round, file tax returns early, and obtain an Identity Protection PIN. In the event of fraud, it is essential to report it immediately to the IRS, notify financial institutions, file a complaint with the Federal Trade Commission, and consider placing a fraud alert or security freeze on credit reports.

By being proactive and taking action, individuals can protect themselves against identity theft and tax refund fraud.

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