Death, Taxes, and Identity Theft
Although Benjamin Franklin’s famous quote on the certainty of death and taxes didn’t include the risk of identity theft, it would be fitting in today’s world. Every year, identity thieves attempt to pilfer billions in federal withholdings from unsuspecting individuals. It has become crucial for taxpayers to exercise extra vigilance, especially during the early tax filing season – a prime time for fraudulent activity.
Why the need for caution particularly during the early part of the tax season?
The federal government accumulates withholdings from your paycheck throughout the year, and until you file your tax return, the IRS remains uncertain about whether you are eligible for a refund. Exploiting this uncertainty, identity thieves often file fraudulent tax returns early in the season, nabbing your refund before you can even submit your own return. Even if you typically owe taxes rather than receive a refund, there is nothing stopping an identity thief from making up phony wages or other income to generate a refund.
Here’s how you can help prevent your tax return from ending up in the wrong hands:
- Identity Protection PIN (IP PIN): Obtain an IP PIN from the IRS, a unique six-digit code that enhances the security of your tax return and prevents identity thieves from filing fraudulent claims. Visit irs.gov/IPPIN to get your IP PIN.
- File Early: If possible, be proactive and file your tax return as soon as possible to minimize the risk of thieves filing a tax return ahead of you.
- Monitor Credit Reports: Regularly check your credit reports for any suspicious activity to safeguard your financial accounts and personal information.
- Practice Safe Habits: Adopt best practices to protect your identity, including being cautious with your Social Security Number, securing credit cards, avoiding sharing information over the phone or unsecured email, using password protection on your devices, staying vigilant about strange mail, and shredding important documents.
The IRS has enhanced its ability to identify fake tax returns, and if you receive a notice of suspicion from the IRS:
- Respond immediately and contact the IRS directly using official channels—be wary of phone calls, texts, and emails purporting to be the IRS.
- File an Identity Theft Affidavit (IRS Form 14039) to document the issue, prompting the IRS to take additional measures to safeguard your account.
- File a police report and notify the credit bureaus about the potential identity theft.
While identity theft during tax season poses significant challenges, staying vigilant and adopting protective measures can mitigate the risks. Take charge of your financial security by staying informed and implementing these proactive steps to protect your tax records.
Advisory Services offered through Peak Asset Management, LLC, an SEC registered investment advisor. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This content is developed from sources believed to be providing accurate information and may have been developed and produced by a third party to provide information on a topic that may be of interest. This third party is not affiliated with Peak Asset Management. It is not our intention to state or imply in any manner that past results are an indication of future performance. Copyright © 2024 Peak Asset Management
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