In 2016, the IRS paid out nearly $239 million in “suspect tax refunds” and while the organization announced a steep decline in tax-related identity theft last year, fraud is an ongoing issue this time of year. In light of recent data breaches that made U.S. residents’ personal information more vulnerable than usual, it is likely that the number of fraudulent tax returns will increase in 2018. So, what can consumers do to best protect themselves this tax season?
All tax and security experts will tell you that filing early will eliminate the potential risk of fraud. While we’re nearing the middle to the end of tax season, tax filers should not put it off any longer, file today. While filing early doesn’t mean filers are completely risk free, filing early can ensure a fraudster doesn’t beat you to filing a tax return in your name. Other benefits to filing early? Getting your money sooner (if you are owed by the IRS) and having more time to come up with payments (if you owe the IRS.)
Avoid Paper Filing
In an effort to not submit a fraudulent tax return yourself, plan to e-File with the IRS rather than submitting a paper tax return. Those that do their taxes on paper are about 20 times more likely to make an error than e-filers, according to the IRS. Common mistakes include wrong social security numbers, wrong names (especially those who were recently married), filing status errors, math mistakes and errors in determining credits or deductions.
Be Vigilant Year Round
Being aware of your personal information isn’t something to only think about during tax season, it’s a full-time job. Whether through your bank, or credit card company, it’s smart to choose a credit monitoring service for year-round protection, not just ahead of tax season. Aside from a monitoring service, always be on the lookout for potential fraudulent purchases on your bank or credit card statements. In the age of everything being digitally available, getting in the habit of checking all your accounts online every day, isn’t a bad idea. Once your tax return has been filed, be vigilant about checking the status of your return as well. The IRS offers tracking service through their website that updates approximately every 24-hours, which can give you a good indication of where your return (and payment if you are owed) stands.
Be Consistent Year-over-Year
Believe it or not, creating patterns with your tax filing habits could actually help the IRS detect fraudulent activity. It’s not a sure way to completely avoid falling victim to a tax scam, however the more consistent you are when filing your taxes, the safer you could be. Using the same filing address, tax service or accountant and bank account to which your return is deposited are all elements of the tax filing process you should aim to keep the same.
Fraudsters are getting smarter and because of the digital world we live in, the access points in which any of our personal information is available is no secret. In fact, phishing schemes are a top filing concern for the IRS this year and it’s not just individual tax payers that should be concerned. Tax professionals, payroll professionals, human resources personnel and schools are other targets for tax season phishing schemes. From the WiFi connections we use and the generic passwords we are all guilty of making to the posts we create on social media and the information we freely e-mail or text about, hackers can easily find the three things they need to commit tax-related fraud: name, date of birth and a social security number.
RELATED: For more on best ways to protect yourself, check out our podcast featuring Lance Spitzner, Director at SANS Securing the Human, around the recent Equifax Breach.