Protect your identity this tax season

Consumers and businesses aren't the only ones preparing for tax season. The scammers are too.

How tax identity theft scams work

Online filers who go through the IRS website usually expect a refund. Instead, a written notice arrives in the mail, stating more than one tax return was filed using your information.

Scammers got hold of personal information, typically the account holder's Social Security or Social Insurance number, address and birth date. They filed your return early and received your refund before you even got around to filing. Tax ID theft is a particularly sneaky con because victims typically don’t realize they’ve been targeted until they actually file their taxes.

Scammers steal tax information in several ways such as a phishing scam, a corrupt tax-preparation service, or the information was exposed in a hack or data breach. Sometimes tax scammers file in the name of a deceased person or steal children’s identities to claim them as dependents.

How to avoid tax ID theft scams

—File early. The best way to avoid tax identity theft is to file your taxes as early as possible, before a scammer has the chance to use your information.

—Watch out for red flags. If a written notice from the IRS arrives in the mail about a duplicate return, respond promptly. Or if an IRS notice arrives stating you received wages from somewhere you never worked or receive other notices that don’t actually apply to you, contact the IRS office immediately. Another big red flag is if you receive a notice that “additional taxes are owed, the refund will be offset or a collection action is being taken against you for a year you did not file a tax return.” Contact the IRS if you have any suspicions your identity has been stolen.

—Secure your personal information digitally. Use strong passwords for online accounts, enable two-factor authentication when available and avoid storing sensitive tax documents on unsecured devices or cloud storage.

—Avoid filing taxes on public Wi-Fi. If you file taxes electronically, avoid using public Wi-Fi networks that might be vulnerable to hackers. Use a secure, private network or a virtual private network.

—Protect your Social Security number. Don’t give out your SSN or other personally identifiable information unless there’s a good reason and you’re sure who you’re giving it to.

—Research your tax preparer. Make sure your tax preparer is trustworthy before handing over your personal information.

—Use your Identity Protection PIN, the six-digit number, which, in addition to your Social Security number, confirms your identity. Once you apply, you must provide the IP Pin each year when you file your federal tax returns. Visit www.IRS.gov for more information.

—Shred sensitive documents. Before discarding old tax forms or documents containing your personal information, shred them to prevent dumpster divers from accessing your data.