Wednesday, January 30, 2013

7 Ways to Protect Yourself Against Tax Scams

Cameron Huddleston
Follow these steps to lower your risk of becoming a victim of identity theft or tax fraud.



You've probably started to receive some tax forms in the mail, and tax season officially starts January 30 when the IRS begins accepting returns. Even if you're not ready to start preparing your taxes, you need to start thinking about protecting your identity because thieves are looking for ways to steal it at tax time. In particular, they're after your Social Security number so they can use it to fraudulently file a return to claim a refund.

Tax- and wage-related fraud often tops the Federal Trade Commission's annual list of identity theft complaints. And the IRS sees thousands of scams meant to trick taxpayers into revealing personal information. The agency says it has stepped up its efforts this year to protect taxpayers from ID theft, including increasing the number of screening filters to spot fraudulent returns filed by thieves to collect refunds that don't belong to them. (Read about more IRS anti-fraud efforts). However, taxpayers need to take their own steps to protect their identity and guard against fraud during tax season.
Guard your Social Security number. The IRS warns taxpayers not to carry their Social Security card or any documents with your Social Security number or taxpayer identification number on them. And do not give out these numbers just because you're asked. You will be required to provide your Social Security number in any situation that requires your identity to be verified (such as an application for credit or a license) or about which the IRS must be notified. Otherwise, be sure to ask whether the agency, business or organization has to have it.

Monitor your mailbox. Make sure you receive all the W-2, 1099 and other tax forms you expect to get. If you fail to receive some, contact the company or financial institution that was supposed to send them to find out if and when they were mailed. If you suspect that any of these forms were stolen from your mailbox, contact the IRS Identity Protection Specialized Unit at 800-908-4490 extension 245.

Ignore e-mails from the IRS. The IRS doesn't send taxpayers e-mails or text messages. So do not reply to e-mails or messages supposedly from the IRS, open any attachments (which could contain viruses) or click on any links (which could take you to a fraudulent site). Forward all suspect e-mails to phishing@irs.gov.

Be wary of people claiming to be IRS agents. Don't reveal any personal information if someone calls and claims to be from the IRS. Instead, call the IRS at 1-800-829-1040 to see if an agent has a legitimate need to contact you.

Protect your refund. If you file your tax return by mail, use certified mail from the U.S. Postal Service to confirm that your return was received. And opt for direct deposit of tax refunds to avoid lost or stolen checks. The best way to make sure your refund check doesn't end up in the wrong hands is to NOT have a refund coming in the first place. To do so, use our tax withholding calculator to find out how many allowances you should be claiming on the W-4 form filed with your employer so you can get your money when you earn it -- not in a refund next spring.

 
These posts are for informational use only to educate people about their online income taxes and the financial world around them. If you found this helpful, share the original article or this one, and help spread the word! With tax season rapidly approaching let us get you the best income tax return you can possibly have by e-filing! Leave us a comment if you want to share your opinion.
 
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