Even though April 15 is still some time away, tax season has officially begun. If you're one of the lucky ones expecting a refund this year, you probably want to file as soon as possible, and filing online guarantees a quicker payday... unless someone else has already filed for your refund using your identity.
It happens more often than you think. There are many ways internet thieves can get your personal information, but the Internal Revenue Service has issued a “dirty dozen” list that may help you avoid these scams.
According to the Center for Internet Security's website1, there are three big scams that keep reappearing. The first, phishing or malware schemes, are easier to spot than you'd think. If you receive an email that purports to be from the IRS or state government or even financial institutions, they will ask you to click a link that takes you to their website. They're hoping they'll trick you into logging in with your personal information, such as Social Security number, bank account, birthday, and so on. Or, they may simply download malware into your system that will steal this information the next time you use it on a legitimate site.
Never follow an email link. Instead, type the organization's name/website address into your browser. If you suspect fraud, contact the company, and never reply to emails or texts that ask for any personal information.
Once thieves have this information, they can file a false return using all your information. If they beat you to the punch, they'll get your money and you'll get a massive headache and the overwhelming task of proving to the IRS that it wasn't you who filed the return. Thieves often cull this personal information with phishing schemes or even phone calls pretending to be from the IRS. Be aware the IRS never contacts taxpayers directly to ask for this sort of information.
Another scam that's gained traction in the past few years is the phone call, also claiming to be from the IRS, claiming you owe money, either to federal or state taxes, and threatening to bring in the police unless you pay immediately, either through a credit or debit card, or even something as unusual as a gift card or prepaid credit cards. Unfortunately, enough people fall for this scam that it's still around.
On the chance you do owe money, the IRS will never contact you directly via phone call or email. It will always come in the form of snail mail.
These are the three big scams, but what other things can you do to protect your hard-earned refund?
The answer is surprisingly simple, and sensible. Never give out your Social Security number. That's a skeleton key to all your personal details. According to Turbotax, these little precautions can go a long way toward keeping your information – and money – safe.2
When doing any kind of business online, make sure you have a storng password. Don't have your computer remember it for you, have separate passwords for different sites, and change your passwords regularly.
Have the latest security software installed or updated on your computer, and use a firewall.
If you discard or recycle your old computer, always wipe or, better yet, destroy your old hard drive.
If you insist on receiving paper bank statements, always shred them – or any financial documents – after you've finished with them. This goes for any unsolicited credit card offers you may receive. Just because you're not interested doesn't mean a thief won't be, so shred those pre-approved offers. If you're getting too many offers to keep up with, you can request no more solicitations by calling 1-888-5-OPTOUT.
These are just a few of the things you can do to ensure yourself a safer tax season, but one of the best things is to file your returns immediately, before anyone else has the chance to do it. They can't very well claim your money if you've already gotten it.3
Nevertheless, bad things do happen, so if you're a victim of a tax scam or your personal information was exposed in a major data breach, you'll want to report it immediately by contacting firstname.lastname@example.org or calling the IRS at 800-908-4490.
1. CIS, “Staying Safe From Tax Season Scams,” February, 2017
2. Turbotax, “10 Steps to Avoiding Tax-Return Identity Theft,” 2017
3. CIS, “Staying Safe From Tax Season Scams,” February, 2017