Preventing Tax Identity Theft

As if filing your taxes weren’t stressful enough, sometimes the process reveals you’re a victim of tax identity theft. Tax identity theft occurs when someone steals your Social Security number and uses it for fraudulent purposes. Unbeknownst to you, the criminals may file your taxes in order to claim your refund, resulting in tax return identity theft. They may also use your Social Security number in order to obtain employment.

Preventing Tax Identity Theft

The IRS uses your Social Security number to ensure your filing is accurate and that you receive any refund due to you. To help prevent tax-related identity theft, keep your Social Security number safe. Follow these best practices:

• Store your Social Security card, W-2s, and other documents from the IRS or containing your SSN in a locked safe. If transporting them to an accountant or elsewhere, lock them in your trunk.
• Request to have tax documents sent digitally as opposed to in the mail. If you must use mail to send and receive tax documents, use a secure, locked mailbox.
• Shred any tax-related documents before discarding them.
• Use a strong password when filing online and regularly update your computer’s operating system, firewall, and antivirus software.
• If you hire an accountant to file your taxes, ask about the security measures he or she will take to keep your information safe. Refer to the IRS’s Directory of Federal Tax Return Preparers for assistance finding a preparer in your area with IRS-recognized credentials.

See our Identity Theft Prevention Checklist.

Detecting Tax Identity Theft

If you’re a victim of tax return identity theft, you won’t know until you submit your return yourself. The IRS will send you a notice or letter saying that your return was already filed. In the event that someone uses your Social Security number to obtain employment, you’ll again uncover this once you submit your return. In this case, the IRS will notify you that you have unclaimed earnings. The IRS won’t know that the unreported wages resulted from fraud; their records will only show that you failed to report all your income.

Tip: The IRS will never send you an email, text, or social media message asking for your financial information. If you receive a message via any of these channels claiming to be from the IRS, forward it to phishing@irs.gov. Do not respond, download any attachments, or click any links.

Recovering From Tax Identity Theft

If the IRS notifies you that they have detected a problem with your return, begin by following the steps they outline in their letter. If you suspect for other reasons that you may be a victim of tax fraud identity theft, contact the IRS immediately. Bottom line: the first step toward dealing with tax-related identity theft should be to contact the IRS. Their specialists will recommend you file a complaint with the Federal Trade Commission and help you unravel what’s happened from there.

Next steps will vary depending upon the situation. If someone filed your taxes to steal your refund, you’ll need to fill out IRS Form 14039 - Identity Theft Affidavit. If someone used your SSN to gain employment, you’ll likely contact the employer to inform them of the fraud and to confirm that you do not work for them.

Throughout the recovery process, keep a document where you log whom you contact, when you contact them, and what you discuss. In addition, you’ll want to place a fraud alert and request your credit report to check for additional fraud.

Learn more about recovering from identity theft.