Well it’s tax time again, did you file your taxes yet? If you’ve got yours done already you are way ahead of the curve, but if you don’t you may want to get them done sooner than later because tax scams have become a big problem especially over the last few years.
In fact according to CNBC the IRS expects pay out $21 Billion in fake tax refunds over the course of the next 5 years, which means income tax scams are a booming business for identity thieves.
How Do Tax Scams Work
Basic tax return scams work in many different ways but what typically happens is someone steals your financial details from your name, social security number, date of birth, and who knows what else. From here they file a fake return and submit it to the IRS.
What’s worse about this scam is that these scammers are literally untraceable, and in most cases you won’t know that anything is wrong until you go to file your taxes and they inform you that someone has already filed under your social security number.
Now you might be wondering how someone could possible get your information, and the reality is the possibilities are endless but here are few of the common methods these criminals will use in this particular scam.
- Phishing Scams. Phishing scams can come in all shapes in sizes but one of the most common ways they will steal your info is by sending you a fake email designed to look like it’s actually from the IRS claiming that someone is trying to steal your identity and that you have to verify your info.
- People In High Authority Places. The other common way people are getting hit up by this scam is by people who are in higher authority places, such as accountants, who will try to change information on your tax return so you get a bigger return. The problem with this is that it’s illegal for a tax professional to get paid by a percentage of your tax returns, or to falsify your tax returns.
The truth is your information is out there and someone could steal it. Now I’m not trying scare anyone because their are some things you can do to protect yourself.
How To Protect Yourself From Tax Scams
Before I dive into the different kinds of tips I came across a great video that covers some great points about ways to protect yourself from these scams by MoneyTalkNews.com.
To summarize things a bit here are 5 key tips to protect when you file your taxes this year.
- File Early – One way to prevent this from happening to you is to file your taxes early. According to CBS News almost 25% of all people will wait till nearly the last minute. However by filing sooner it gives scammers less time to hack your tax return and steal your hard earned money.
- Beware of Fake IRS Emails - The IRS will never send you an email to confirm your personal information, in fact they don’t send emails at all. This also goes with phone calls too.
- Don’t Alter Your Info - Another thing you’ll want to avoid is altering some of your tax info such as claiming you contributed more money to you retirement account or claiming you earned less than you really did. On top of that never let your tax professional do this with your return either. A lot of times they will want you to get a higher return for a cut in the profits. Just remember it’s your name going on that tax return and you and the tax accountant will be held liable if it’s wrong.
- Get A Copy Of Your Returns - Before leaving a tax professionals office make sure you get a copy of your return. This can prevent theft and save you from a whole lot of problems if something were to go wrong.
- Get Help – Finally, one of the best ways to keep tabs on your identity and protect it during this time of the year is to sign up with an identity theft program. I’ve been a member of Lifelock for almost a year now and one of the things I like about this program is that they can scan thousands in not millions of databases looking for people who are misusing your information. You can learn more about Lifelock Here.
What tips can you give that will help people avoid getting hit by tax fraud this year?