If you thought you were all set after the Equifax breach because you froze your credit, you’re wrong. You need to educate yourself about a type of identity theft that has nothing to do with your credit report – tax identity theft.
You may not know it, but today kicks off Tax Identity Theft Awareness week! Woo Hoo! Time for my annual celebration!
OK it’s not time to celebrate, but instead it’s time to learn and reflect. As an identity theft victim myself, having researched ways to protect your credit after the Equifax hack as well as having read books on this subject, identity theft is a subject I’m passionate about.
So buckle up while we talk about the horror story that is tax identity theft – and what you can do to protect yourself. Later this week on Wednesday I’ll tell you all about protecting your work identity – and how to protect your kids from becoming victims on Friday.
Freezing Your Credit Is Not Enough
After the Equifax breach, you may have frozen your credit and figured you were protected from identity thieves. Sorry, but the IRS doesn’t care about frozen credit.
Tax identity theft typically involves someone using your stolen identity to complete a tax return in your name, with a (presumably large) refund sent to them. You only find out when you go to file your return and you’re informed that “Oops!”, you already filed a return. Then you get to begin the lovely 9-18 month process to clean up your tax identity. And guess who doesn’t get a refund in the meantime? Yep, you.
In preparation for today, I’ve done research on identity theft statistics, helpful tips, and resources. Here’s some of those key stats and tips:
You’ll notice I keep encouraging you to read that book. It is, hands down, the best book on identity theft and personal security I’ve ever read. Go right now and either order it off Amazon or reserve it from your library. You will thank me later. (Note links to Amazon are affiliate links, I will get a commission if you get this from Amazon. But you can always get it from the library).
If you’re interested in educating yourself on the subject, I recommend checking out the FTC’s webinars being offered this week for tax identity theft awareness. The IRS also has some great resources to educate yourself. And of course, you can do your part to help spread the word on tax identity theft awareness and prevention by sharing this post.
Tips and Tricks
Obviously with the Equifax breach last year, more and more people are concerned about their identities being stolen. We need to leave the prevention of fraudulent returns up to the IRS in many cases. But how can you do your part to prevent tax identity theft?
Here are a few of my key recommended tips and tricks:
- File Early: The earlier you get your valid return in, the more likely it is that your return will trump a fraudulent one.
- Consider not getting a refund. Yes, refunds are fun. Although like I’ve said before, they are not a reward. If you don’t get a refund, or get a small one, it’s not really going to matter to you if your tax identity is stolen (financially speaking, anyway).
- Protect your identity. Sure, it was probably stolen in one of the big data breaches. But that doesn’t mean you shouldn’t do your part. Don’t click on suspicious links, shred documents (you have a shredder, right?), don’t carry around your social security card, only give your SSN to trusted individuals who have a valid need to have it, etc. Read my articles above if you want an in-depth review of how you can protect your identity.
- Report ID Theft To Police. If your identity is stolen, be sure to file a police report.
- Get a PIN. If you’re an identity theft victim, you need to file IRS form 14039, Identity Theft Affidavit. You will likely get a PIN to file future returns.
- Educate Yourself. This is a good first step, but I’m going to recommend you go ahead and check out the other resources I’ve linked to.
If Your Tax Identity Is Stolen
I put out a question on Twitter the other day asking what folks wanted to know about identity theft. My friend Alex from FinHealthy had a question:
If you find that your tax identity has been stolen, you’re going to be in for some paperwork. But it’s important that you get started immediately, since the longer you wait the longer it will take to resolve. According to the IRS Taxpayer Guide to Identity Theft:
If you are a victim of identity theft:
- File a complaint with the FTC at identitytheft.gov.
- Contact all three credit bureaus and either freeze your credit or put on a fraud alert. You can do this on the phone, but I would recommend doing it online. You can find freeze information here – Equifax, Transunion, and Experian.
- Contact your financial institutions (like banks or credit card companies), and close any accounts that have either been compromised or opened without your say-so.
- Contact the police and file a police report
- Respond immediately to any IRS notice; call the number provided.
- Complete IRS Form 14039, Identity Theft Affidavit. Follow the instructions on the form. You can call the IRS at 1-800-908-4490 if you have tried filing the form but haven’t heard back
- Wait for a long time, and respond to any letters they send you.
More Identity Theft Resources
My friends Full Time Finance and Sun Burnt Saver have both written some great articles about identity theft you should check out.
- How to protect yourself after your identity has been stolen
- Protecting yourself from financial scammers
Stay tuned for Wednesday’s work identity theft protection discussion, and then on Friday learn all about how to protect kids from ID theft! It’s an identity kind of week.
What questions do you have on ID theft – or what else might you want to know? Let me know in the comments!
Be sure to follow my blog for more great posts via e-mail or WordPress, or connect with me on Facebook or Twitter and say hello! You can also check out what I’m buying or baking on Instagram, what I’m pinning on Pinterest, or the latest books I’m reading (or want to read) over on Goodreads.
8 thoughts on “Thieves Are Everywhere: Protect Your Tax Identity (Remember Equifax)”
#2 is all you need to know – don’t get a refund.
I could never understand someone who would give Uncle Sam an interest free loan. That money could have been yours all year, and in the market making money for you!
I wrote last year about how your tax refund is not a reward. Personally I prefer to owe a small amount, and not get a refund, for the reason you mention
I feel exactly the same way – though I try and get us as close to zero as possible. Good to know that tax identify theft is just one more thing added to the list why I’m happy not to get a refund.
First off thanks for including us. My father in law experienced tax identity theft. The joy of needing to provide a separate is when doing taxes basically forever goes with that joy. Thankfully he had no refund so it was a low financial cost. Major annoyance though.
The annoyance level is higher than the financial loss in many cases. My identity thief never caused me a dollar of financial loss, but a ton of time and pain
Thank you for this information.
Because I never seem to accurately predict how the year will go, I haven’t managed to owe a smidge / get a smidge refund consistently. 2015 I spent a few months unemployed so my total year income was low, I got a bit if a refund. 2016 yoga teaching opportunities kept coming up, plus full time job, so I owed. *shrug*
I’ve only had one or two years where I hit it on the nose. One year I switched to a 15 year mortgage (lost mortgage deduction) and finished my MBA (lost education deduction) and forgot to adjust my withholding. I owed more than $7k!!! Ouch. And last year I got a big refund because my company withheld too much. Oh well. I try! 😀
I’ve had my information stolen and used. Freezing credit mainly fixed the issue. This is scary!