Tax season is here, and between rampant data breaches and identity theft, and good old-fashioned criminal activity, navigating the process can be scary. Fortunately, taxpayers can employ several strategies to help them successfully file their returns while minimizing the risk of tax identity theft.
The first question, though, is whether to file your own return or have a professional prepare it for you. There are advantages and disadvantages to both, with different scams and other threats to keep in mind.
I'm Preparing My Own Return
For many taxpayers, preparing their own tax return and filing electronically can be handled in a matter of hours. The ability to e-file has streamlined the process, and several companies sell helpful consumer software for filing a straightforward return. There are some things to keep in mind, though.
1. Gathering Your Paperwork Is Crucial
Throughout January, various tax documents should have arrived in the mail. It's important to protect these documents—not just so they're handy when you're filing, but also so they don't end up in a thief's hands. Once collected, make sure they're safe from anyone who has access to your home.
2. Setting Up Your Online Accounts
Whether it's your IRS.gov filing account or the account you establish with your preferred tax prep software or website, use a strong, unique password. That means a lengthy combination of uppercase and lowercase letters, numbers and symbols. Most sites require at least eight characters, but the longer you make it, the harder it will be for a hacker to crack it. Make sure you don't reuse this password on any other website or account.
3. Avoid Scams and Fraud
IRS scams and tax return fraud are ongoing problems, but you can fight back. First, remember that the IRS will never call you and demand payment or ask for sensitive information.
Never give out your personal information or make a payment over the phone to a caller. Another note about payments: The government does not accept payment in the form of iTunes gift cards, no matter what the "agent" tells you, and you are not legally required to pay by Western Union, prepaid debit card or any other untraceable method. When in doubt, you are within your rights to take the caller's name, agent number and phone number, then contact the IRS yourself using a verified contact number.
4. Help, My Return Was Rejected!
There are a number of things that can go wrong when filing your tax return, and not all of them indicate a malicious problem. However, if your W-2 forms never show up or if your e-file return is rejected, it may be a sign that someone has stolen your information. If that's the case, contact the IRS immediately or call the Identity Theft Resource Center for help.
I'm Using a Professional Tax Preparer
A lot of consumers choose to use a professional tax preparer, especially if their finances are better served by a licensed, knowledgeable professional. Unfortunately, turning everything over to a professional doesn't mean you're out of the woods when it comes to identity theft, fraud and scams.
1. Choose Your Preparer Wisely
It's not just a matter of making sure you get the most knowledgeable preparer, although that's certainly important. This individual is not only going to have their hands on your entire identity (Social Security number, birthdate and more), but they're also going to enter it into a computer. Who is this person? Are they a long-standing professional in your community, or did they hang out a shingle in a temporary office just in time to capitalize on the tax season rush?
2. How Will They Protect You?
Even if you choose a trusted professional who comes highly recommended, accidents can still happen with your data. How does the preparer secure their servers? How do they protect your sensitive information from hackers? Does everyone in the preparer's office have access to all of the clients' sensitive data? Are they vulnerable to a phishing email that tricks a secretary into sending out client files? These and other similar questions are important; you shouldn't be embarrassed or feel awkward about wanting answers.
However you choose to prepare your tax return, remember that identity thieves and scammers are good at what they do. They constantly switch tactics to evolve with the latest security and tech trends, and as a taxpayer, that means you have to be diligent about watching out for potential signs of tax fraud.
If you do find out that your information has been compromised, contact the Identity Theft Resource Center's advisors at (888) 400-5530 to learn about the necessary steps to take to resolve the issue.
Experian proudly provides financial support to the Identity Theft Resource Center.
Editorial Disclaimer: Opinions expressed here are author's alone, not those of any bank, credit card issuer or other company, and have not been reviewed, approved or otherwise endorsed by any of these entities. All information, including rates and fees, are accurate as of the date of publication.
This article was originally published on February 18, 2019, and has been updated.