It’s tax season, and experts say before you file that return, you need to beware of people who want to take your hard earned cash.
According to the IRS, crooks are using taxpayers’ real bank accounts to deposit refunds from fraudulent returns.
In some cases, they are posing as debt collectors that contact taxpayers to say the refund deposit was made in error and that they should forward the deposit to the fake debt collector.
Last year, the IRS stopped more than 600,000 identity theft tax returns. The number of thefts are going down, but fraudsters have been targeting tax professionals, Human Resource departments and anyone that handles payroll.
Even though fewer people are reporting identity theft, no one wants it to happen to them.
Here are some steps you can follow to protect yourself:
- File early – If the IRS already has your legitimate tax return on file, fraudsters will have a much harder time filing a fake return in your name.
- Watch for red flags – The IRS will never email you, send a text or contact you on social media. The IRS will contact you by sending a letter in the mail. Following a written notice, you may receive a phone call or a visit from an IRS Revenue officer.
- Safety first – If you’re e-filing your taxes, make sure you have a social security software with firewall and anti-virus protections. Do not use public Wi-Fi; instead use a private, password-protected connection. And don’t leave them lying around in the open.
- Adjust your withholding – When you have too much money withheld from your paychecks, you end up giving Uncle Sam your money (interest-free). But you also don't want to have too little withheld from your paycheck. That could mean an unexpected tax bill or penalty. Ideally, you want to have just enough money withheld so your refund is as close to zero as possible.
With the new tax laws on the books, Roger Cowen with Cowen Tax Advisory group suggests that filers use and accounting firm to make sure your information is accurate. “If you’re not familiar with all of the changes because often you don’t know what you don’t know until someone points it out to you. And then when you have a problem with the IRS, problems are hard, aggravating and time consuming to fix,” said Roger Cowen, Cowen Tax Advisory group.
And if you think you’re a victim of identity theft, experts suggest that you file a police report, reach out to the IRS, contact the fraud department of the three credit bureaus. Make sure to document everything and stay in contact with the IRS until the issue is resolved.