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Protecting Yourself from Tax-Related Identity Theft

| March 07, 2016
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Tax season is in full swing and so are tax-related scams. The IRS has already seen a 400% increase in phishing and malware incidents and, since January, there have already been 1,389 reported incidents. Tax-related identity theft can happen to anyone, and we’ve seen such scams happen to clients over the years.

During this season, it’s important that you safeguard your personal information and know how to detect possible scams and fraud. Whether you’re working with an accountant or filing yourself, follow our tips for avoiding identity theft this tax season.

How does tax-related identity theft happen?

There are a few different ways, but they all boil down to a hacker accessing sensitive personal information, such as your Social Security information and birth date, filing a fraudulent tax return in your name, and collecting a refund. Most victims won’t even know this has happened until they attempt to file their tax return and receive a notification that a return has already been filed in their name.

Often, hackers obtain your personal information through emails and phishing schemes. The emails pretend to be from the IRS, TurboTax, or a similar tax authority or software company and claim to need personal information from you to confirm your personal information, send you a refund, or verify your filing status. Scarily enough, these emails look very authentic, which is why so many people fall prey to these scams.

How can I protect myself from tax-related identity theft?

The simplest answer is to be judiciously protective of your personal information — especially your Social Security number. The IRS, Turbotax, and other legitimate tax authorities and companies will never ask for your Social Security number via phone, email, or text. You also will never receive a message demanding immediate payment. If a form requests your Social Security number, confirm whether it is necessary to fill out. When in doubt, if you aren’t sure a call, email, form, or letter is legitimate, call an official number for the business or company and verify that the request is accurate.

Secondly, adhere to safe computer practices whenever filing tax forms or using any website that requires sensitive information. When creating an account, use strong, unique passwords that can’t be hacked easily. Use antivirus and firewall software on your computer for extra protection and never log into highly sensitive accounts (such as Turbotax or your bank account) on a public computer or when using a public Wi-Fi connection.

And lastly, shred paperwork you no longer need, such as old bills, financial statements, expired credit cards, tax returns older than seven years, paycheck stubs, and other documents that contain any account numbers or personal information.

What are a few signs that someone has stolen my identity?

If someone has stolen your identity, you may receive bills from unfamiliar businesses, calls from debt collectors for debts that aren’t yours, a notification from the IRS that a tax return was filed in your name, or a notice that your information was compromised by a data breach.  Visit theFederal Trade Commission’s Consumer Information for other common signs of identity theft.

What should I do if my identity has been stolen?

First, check to see if you have your Social Security card, all credit cards, driver’s license, and checkbook. If nothing was physically stolen, it’s likely that the scammer received your information online.

Call all banks and anywhere you have an account to notify them that your identity has been stolen and put a 90-day fraud alert on all three credit reports. This will notify lenders and creditors that they should take additional steps to verify your identity. To do this, contact one of the three major credit agencies —Experian,Equifax, orTransUnion.

Along with notifying credit agencies and banks, file a report with your local police department, file anIdentity Theft Affidavit with the Federal Trade Commission (FTC), fill out areport with the IRS, and notify theSocial Security Administration. You will also want toorder a copy of your credit report to check for fraud. Make note of all fraudulent information. Do the same for all credit card statements and bank account balances.

How can a financial advisor help me?

At Engaging Women in Wealth, we consider ourselves your financial partner. While we can’t prevent identity theft or tax scams from happening, we do our best to educate our clients on how to protect themselves. We’re also here to answer your questions and offer advice on steps to take. If you have questions about identity theft or tax fraud, get in touch with us by calling our office at 858.756.0004 or emailing us at [email protected]

You can also pass along this article to your friends and family to help them safeguard their information and let them know we’re happy to speak with them if they have any questions.

About Deb Sims

Deborah Sims is the Principal of Estate Management Group, a wealth management and financial services firm offering comprehensive and customized strategies to help her clients manage their assets and feel confident in their future. Her mission is to serve as her clients’ most trusted wealth advisor through professional knowledge, integrity, and personalized wealth management services. Based in San Diego, California, Deb’s team has offices in Rancho Santa Fe, Old Town, and Del Mar. She invites you to contact her team today to learn more about how they can help you.

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