4 Ways to Avoid Becoming the Victim of a Tax Scam
Tax scams are far more common than you might think, and hundreds—if not thousands—of taxpayers deal with this nightmare each year. Of course, tax season is when these scammers and thieves are going to be most active, but now is the perfect time to start thinking about your information security, and taking steps to protect yourself from any scams, and reduce your odds of being a tax fraud victim in the coming tax season. Here are 4 things you can do to avoid falling victim to a tax scam or tax fraud.
Keep Your Information Secure
One of the main reasons for hackers and thieves to be so active during tax season is because so much of your information is being shared at this time of year. During tax season, you’re compiling documents and information pertaining to your identity, finances, and other sensitive data that can easily be used to steal your identity—or, at the very least, steal your tax refund.
So, while it’s important to protect your data at all times, tax season is a great time to do a double check of your cyber security. Consider updating your passwords, and be sure to use unique, complex passwords that are difficult to break. Shred any paperwork you don’t need. Don’t login to financial accounts on unsecured Wi-Fi networks, and don’t file your return on a public computer. Keep sensitive documents—Social Security cards, past tax returns, etc.—in a secure location.
Be sure that you are only providing your tax information to a source that you trust, whether that be your personal accountant, or a reliable and reputable tax filing software. Do a little research, or ask about the security measures any company you use employs to protect your information.
File Your Return Early
One of the major tactics for criminals committing tax fraud is to steal your information, then file a return in your name and have the refund sent to themselves. When this happens, the victims usually don’t even know they’ve been victimized until they try to file their return, and the IRS informs them they’ve already received a return in their name. By then, it’s usually too late to do much about it.
But it takes thieves time to steal your information and file a false return. So, the sooner you file your own tax return, the more likely you will be to beat them to the punch. This will ensure your refund gets sent to you, and not to any opportunistic tax scammers. You’ll also get your refund more quickly (if you’re expecting one), which should be added motivation to get your tax return in quickly.
Recognize the Signs of a Tax Scam
One of the best ways to protect yourself from a tax scam is to know the signs that you’re being targeted. Of course, there are certain scams (like filing a false return in your name) that you may not find out about until you’ve already become a victim. However, many tax scams involve the scammers contacting you directly, posing as the IRS.
Please be aware that the IRS will never call you without prior notice of an issue, and IRS employees will never, ever email you. The vast majority of IRS correspondence is sent in written format. So, if you receive a phone call from someone claiming to be with the IRS, hang up. If you get an email from someone who says they’re from the IRS, delete it immediately, and do not click any links contained in the email. These are scammers trying to steal your information.
Many of these scammers employ scare tactics when contacting taxpayers. They will typically claim that you have unpaid taxes, or something similar, and will often make threats of taking legal action against you. Note that the IRS will never threaten you with arrest or anything of this sort, so don’t let the scare tactics trick you into falling for the scam.
Get a Lower Tax Refund
We know, a lot of people look forward to getting a large tax refund. But if you’ve got several thousand dollars headed your way from the IRS, you’re going to make a very tempting target for tax fraud. On the other hand, if you’re expecting under $1,000 in refunds, scammers are more likely to pass you by, even if they’ve already gotten ahold of your information.
This doesn’t mean you have to lose money to protect yourself. Instead, consider adjusting your withholdings on your paychecks. You’ll get a little more money in each check, instead of getting a larger refund at tax time. So, you’ll still be getting about the same amount of income altogether, but you won’t have to worry as much about criminals stealing your tax refund.
If you have any questions about tax scams and how you can protect yourself from these thieves, give us a call today.