The Growing Threat of Tax Return Fraud: How to Protect Yourself

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As the tax-filing season gets underway, you likely have much to worry about. From concerns about a potential audit of your finances to worries about the size of your refund to concerns that you might actually owe the IRS some money, you already have a lot on your plate.

Given the complexity and stress of filing your taxes, it is easy to miss the dangers lurking around you. The IRS is not the only group that wants your money — hackers come out of the woodwork this time of year, bent on stealing refunds and possibly identities as well.

If you want to protect yourself and your money, a little proactively can go a long way. You may not be able to stop the threat entirely, but you can minimize the dangers you face personally. Here are some key things you should be doing in the lead-up to the tax-filing season.

Lock Down Your Devices

Now is the time to lock down your devices, as any security hole could easily be exploited by hackers and other criminals trying to steal your refund and identity. It is especially important to secure any devices you plan to use for your tax filing, including laptops, tablets, and even smartphones.

At a minimum, every device in your home should be secured with a strong password or biometric security. You can also set timeouts for screen inactivity, requiring the entry of that same password to unlock the device. It is also important to lock down your wireless network with the latest in security, as any holes in those defenses are likely to be exploited by someone.

Choose Your Tax Preparer with Care

Sometimes tax return fraud is an insider operation. Shady tax preparers have been caught swiping Social Security numbers, stealing refunds, and misdirecting funds into their own pockets. Choosing your tax preparer with care is important, focusing on brand-name firms with a solid reputation for professionalism and success.

If you really want to trust the person who does your taxes, you might want to start with the image in the mirror. Thanks to online filing and sophisticated software, filing your own taxes is far easier than it once was. Unless your return is especially complicated, you may be able to DIY it, giving you one less point of failure and one less thing to worry about. ezTaxReturn is the fastest, easiest and safest way to file your taxes online.

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Safeguard All Your Tax Forms

From the W2 your employer provides to the 1099 forms that come in the mail, those tax documents contain a lot of valuable information. All that information could easily be misused if it were to fall into the wrong hands, so make sure you keep all those documents safe.

Investing in a lockbox or similar storage solution for your tax forms is not a bad idea, especially if you have housemates. Even if you live alone, having all your documents in one place can simplify your tax filing and make it easier to locate documents if you need them in the future.

Knowing when those various tax forms will arrive is also critically important, as a missing piece of mail or misplaced envelope could easily lead to tax return fraud and identity theft. The U.S. Postal Service offers a service called Informed Delivery, and once you sign up, you can see scanned images of the mail that should be landing in your mailbox. You can simply notify the post office if an important tax form goes missing.

File as Early as You Can

In a typical tax refund scam, a hacker will use stolen credentials to file quickly. They hope to slip under the radar, making off with the stolen refund before the legitimate taxpayer can file.

That’s why it is a good idea to file your own tax return as early in the season as possible. The sooner you file, the less the risk of tax return fraud. Just make sure you have all the documentation you need, including interest statements and income from self-employment, before you submit your return. Avoiding tax-return fraud will be little consolation if a mistake on your taxes triggers closer examination by the IRS.

Have Your Refund Direct Deposited

Lastly, it is always a good idea to have your tax refund directly deposited into your bank account. Checks can be stolen or misplaced, but the direct deposit will go through quickly, giving you one less thing to worry about.

Be sure to double-check the bank information on your return, including verifying the nine-digit routing number and account number. A mistake in this area could slow your refund or even send the money to the wrong account.

Filing taxes is stressful enough, but there are other things to worry about as the April 15 deadline approaches. Even if the IRS does not come calling, a tax return fraudster could steal your money and compromise your identity. The tips listed above can help keep you safer during this difficult and stressful time of year.