The IRS identified 2.3 billion dollars in tax refund fraud in 2020. Experts think this number can increase in the current year as more and more Americans are planning to file electronically.
This might benefit the scammers to trap people so that they become victims of these fraudulent activities. It is imperative to protect ourselves against these fraudulent activities and eliminate scammers looking for this great opportunity.
Continue reading to find valuable tips to prevent yourself from a tax refund fraud.
1. Keep your SSN safe
IRS and state tax authorities use Social Security Number (SSN) to identify taxpayers. Tax return identity theft mainly involves stealing people’s SNN for fraudulent activities during the tax season. Therefore, it is imperative to keep your social security card in a safe place.
It’s best to keep it at home, so you do not carry it if you go out. If this card gets stolen, it can create real problems for you in the future. Also, lock the place where you keep your card so that it becomes unreachable for anyone who looks suspicious at home.
2. Provide your SNN only where it is necessary
Provide your SNN to others only where it is necessary. Keep your details private, and do not share them with everyone who asks for them.
Beware of fraudulent businesses that might ask you about your social security number or email details to be in contact. It is crucial to protect your SNN to get rid of any kind of fraud.
3. Choose a strong password for every financial site
Hackers can easily hack weak passwords and steal financial information to gain maximum advantage. Always choose a solid and unique password to keep your accounts protected.
Never save your passwords automatically, whether it’s a password for online banking or brokerage accounts. Also, keep them changed regularly to protect yourself against tax refund frauds.
4. Protect yourself against computer viruses and scams
Many operating systems offer security software updates to protect against viruses and scams. Take advantage of this facility and make it a habit to use anti-spam and anti-virus software and a firewall to keep your data well-protected.
Also, before selling your old computer, use a data-wipe program to uncover any data in your hard drive. Fraudsters never leave any such opportunity; therefore, you must take preventive steps on time.
5. Keep your financial information private
Fraudsters who can’t hack your computer take help from other sources to attack financial information.
Sometimes they call or send emails so that people can share their details. Beware of them and keep your information private. It’s better to say no to any such kind of call or email unless and until you contact yourself.
6. Don’t fall for phishing and scams
Nowadays, online scams mostly use official-looking emails to impact people’s minds. Remember that IRS will never call you to tell you that you own taxes; instead, they will send an official letter for clarification.
Therefore, be suspicious of these kinds of emails that are meant to leak your SNN or bank account information.
7. Shred tax and bank documents
Consider your tax documents, bank statements, or receipts as potential trapdoors. Keep them safe and when they have no use, shred or burn them to eliminate the chances of any identity theft.
Thieves are fond of stealing peoples’ tax or bank information from papers they see in the trash bins. Therefore, be careful and never give them any chance of doing such ill acts.
8. Monitor your credit report regularly
Monitor your credit report regularly and consider placing a fraud alert on your credit file. This will save you from potential threats that come on your way.
Also, watch for signs where your personal information is being misused. For instance, being contacted by debt collectors, receiving credit cards, receiving bills late, etc.
9. Don’t trust IRS calls
Sometimes, fraudsters impersonate themselves as IRS agents and play with peoples’ minds. They collect their personal information, which eventually turns into a tax refund fraud. This fraud has harmed many; therefore, you need to stay vigilant against such scams.
Don’t trust such calls; never leak your information even if they force you. Remember that the IRS never uses recorded messages or calls to demand immediate payment. Instead, they either issue a letter to your postal address or mail you a bill first against your purchases.
According to McAfee, an attack through social media is a new type of fraud, especially regarding stealing financial information. Fraudsters find nuggets of information about their potential victims and then use this information to access to their accounts.
They can even hack their victims’ IRS e-profile and banking sites and trap them accordingly. Therefore, you must make your social media profiles private and limit personal details or information.
It can happen if you default on child support/student loan debts or owe state back taxes. It can either take all or some of your tax refunds.
Call the IRS Refund Hotline and talk to the IRS employee. You can also visit the IRS site, i.e., IRS.gov; go to “Where’s My Refund?” and follow the prompts to resolve your issue.
You must consider it suspicious if you do not see a watermark on the cheque. Also, look for security features like microprinting on the signature line to make an identification.
Last but not least, safeguard your identity information to fall from being a victim of tax refund fraud. Also, employ personal cyber security practices to keep your computer and mobile safe from any kinds of scam. Educate others as well in this regard.