Protect Yourself from Tax Identity Theft: Tax Security Tips

• admin
• February 21, 2025
• 6 min read

Protecting Yourself from Tax Identity Theft: Essential Tax Security Tips for 2025

Tax identity theft is a growing concern in our increasingly digital world. Cybercriminals are constantly evolving their tactics in cybersecurity to exploit unsuspecting taxpayers, making it imperative for individuals to safeguard their personal information and protect their savings. By understanding the risks and working with experienced tax preparers to implement effective security measures, including security software, you can protect yourself from becoming a victim.

Key Takeaways

• Stay Vigilant: Regularly monitor your financial accounts and tax records to detect any unauthorized activity.
• Secure Personal Information: Employ robust security measures to protect your personal and financial data.
• Utilize IRS Tools: Leverage IRS resources, such as the Identity Protection Personal Identification Number (IP PIN), to enhance your tax return security.

Understanding Tax Identity Theft

Tax identity theft occurs when someone commits tax fraud by using your stolen Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) to file a tax return and claim fraudulent refunds. This not only delays your legitimate tax refund but also requires significant effort to resolve with the Internal Revenue Service (IRS).

Recognizing the Signs of Tax Identity Theft

Understanding the signs of tax identity theft is crucial in taking swift action to protect your financial integrity. Here are some red flags to watch out for:

• Rejected Tax Return: Imagine the frustration of filing your tax return, only to have it rejected because the IRS has already received a submission under your Social Security Number (SSN). This is a clear indication that someone may have used your identity to file a fraudulent return. Such a scenario not only delays your legitimate refund but also signals that your personal information might be compromised. It’s essential to act quickly by contacting the IRS to resolve the issue.
• Unfamiliar Tax Documents: Receiving tax transcripts or IRS notices for returns you did not file can be alarming. These documents might include details of income or deductions that you have no knowledge of, suggesting that someone else is using your identity. This situation requires immediate attention, as it could lead to complications with your tax records and potential financial loss.
• Unexpected IRS Communications: If you receive notices about wages from an employer you haven’t worked for, it could mean that someone is using your SSN for employment purposes. This not only affects your tax records but could also have implications for your Social Security benefits. Such unexpected communications from the IRS should prompt you to verify your employment history and ensure that your identity has not been misused.

Essential Tax Security Tips for 2025

Protect Your Personal Information

1. Secure Your SSN and ITIN: Only provide your SSN or ITIN when absolutely necessary, and avoid carrying your Social Security card in your wallet.
2. Shred Sensitive Documents: Dispose of documents containing personal information securely to prevent dumpster divers from accessing your data.

Enhance Online Security

1. Use Strong Passwords: Create complex passwords for online accounts, incorporating a mix of letters, numbers, and special characters.
2. Enable Multi-Factor Authentication (MFA): Activate MFA on accounts that offer it to add an extra layer of security.
3. Beware of Phishing Scams: Be cautious of unsolicited emails or messages requesting personal information. Remember, the IRS does not initiate contact via email, text, or social media.

Monitor Your Financial Accounts

1. Regularly Check Bank Statements: Review your bank and credit card statements for unauthorized transactions.
2. Review Your Credit Reports: Obtain free annual credit reports from the three major credit bureaus to ensure accuracy.

Utilize IRS Identity Protection Tools

1. Obtain an Identity Protection PIN (IP PIN): An IP PIN is a six-digit number that prevents someone else from filing a tax return using your SSN or ITIN. The IRS encourages all taxpayers to obtain an IP PIN for the 2025 tax season.
2. Set Up an IRS Online Account: Creating an online account with the IRS allows you to monitor your tax records and receive notifications of any suspicious activity.

File Your Taxes Early

1. Early Filing: Submitting your tax return early reduces the window of opportunity for identity thieves to file a fraudulent return using your information.

Stay Informed About Tax Scams

1. Educate Yourself: Familiarize yourself with common tax scams and fraud tactics. The IRS provides resources to help taxpayers recognize and avoid scams.

Steps to Take If You’re a Victim of Tax Identity Theft

If you suspect you’re a victim:

• Contact the IRS Immediately: Call the IRS Identity Theft Protection Specialized Unit at 800-908-4490.
• File an Identity Theft Affidavit: Submit Form 14039, Identity Theft Affidavit, to the IRS.
• Report to the Federal Trade Commission (FTC): File a report at identitytheft.gov.
• Monitor Your Credit: Place a fraud alert on your credit reports and consider a credit freeze.

Frequently Asked Questions

What should I do if I receive an IRS notice about a tax return I didn’t file?

Answer: Contact the IRS immediately using the contact information provided in the notice. You may be instructed to complete Form 14039, Identity Theft Affidavit.

How can I obtain an Identity Protection PIN (IP PIN)?

Answer: You can obtain an IP PIN by creating an account on the IRS website and completing the identity verification process. The IRS encourages taxpayers to sign up for an IP PIN before November 23, 2024, as the system will be offline for maintenance until early January 2025.

Is filing my taxes early really beneficial in preventing identity theft?

Answer: Yes, filing your taxes early can prevent identity thieves from filing a fraudulent return before you do, thereby reducing the risk of tax-related identity theft.

Strengthen Your Financial Safeguards

Protecting yourself from tax identity theft requires vigilance and proactive measures. By safeguarding your personal information, enhancing online security, utilizing IRS protection tools, and staying informed about potential scams, you can significantly reduce the risk of becoming a victim. Remember, the IRS will never initiate contact via email, text, or social media channels to request personal or financial information. Stay alert and protect your financial well-being.