What Can You Do To Prevent Tax & Identity Fraud?
When it comes to filing taxes, there are plenty of reasons to file early instead of waiting until the last minute. The two most obvious are to get your refund back sooner and to avoid long lines in the early-April post office rush.
One of the most compelling and more surprising reasons to file your tax return early, however, may be to avoid identity theft.
With the sharp increase in transactions requiring the sharing of confidential data online and off, tax season is one of the most opportune times for criminals to steal personal data, or capitalize on the information they have already obtained. Filing early may be your best defense.
Fraudulent Tax Returns Are More Common Than You Think
A criminal can use your stolen social security number or personal tax identification number to fraudulently file a tax return in your name. They cash in by having your refund re-routed to a different address or bank account.
Unfortunately, as Travelers Insurance notes, many victims only discover that their identity has been stolen after a fraudulent claim is filed. It takes an average of three months for victims of tax return fraud to receive their refunds while the IRS works to resolve the issue.
Tax-Related Fraud is on the Rise
Identity theft occurs when someone steals your personal information. They may use this data to commit crimes in your name or take over your existing accounts, use your name to open new accounts or apply for loans, among other crimes.
In addition, identity thieves may sell your stolen social security number and personal information to those with poor credit, criminal records or illegal immigrant status, who then use that information to apply for a job. Their employers report earnings to the IRS under your name. Then, when you file your return, the IRS comes after you for failing to report all of your income.
Help Protect Your Identity When Filing Taxes
If filing offline, make sure not to leave any tax forms in the car and shred any paperwork you do not need before throwing out.
If filing online, be suspicious of email claiming to be from the IRS. According to the IRS website, it does not reach out to taxpayers for personal information unless there is an issue. Log off completely when finished with each transaction and be wary of slow-running computers. Request your refund as a direct deposit so criminals cannot have it redirected to their address.
Identity Fraud Expense Reimbursement Coverage
Falling victim to identity fraud could tarnish your name, ruin your credit, compromise your financial and medical history, or drain your assets. Once the damage is done, the road back to restoring what was yours can be both time-consuming and expensive.
Travelers and many other insurance carriers offer identity fraud protection as an additional coverage on your homeowners, condo or renters insurance policy for a low yearly premium. Such protection includes:
- Reimbursement for fees relating to medical identity fraud
- Travel expenses
- Lost wages
- Government issued ID replacement
- Attorneys’ fees
- Resolution services to reclaim your identity and restore credit
- Access to a fraud specialist
Please consider getting identity fraud protection. It’s a relatively small price to pay to help reclaim and restore your identity. Contact us today so that we can review your coverage and make sure you are protected!
