In the rush to file your 2013 taxes before April 15, looking out for federal income tax identity theft may not be at the top of your mind—but it should be. Federal income tax fraud through the use of identity theft topped the IRS’s list of the “Dirty Dozen” Tax Scams for 2014.
An identity thief may use your Social Security number to snag your tax refund or to cause other problems with your tax return.
How do I know I’ve been a victim of federal income tax identity theft?
You may find out that you’ve been a victim of federal income tax identity theft when you try to e-file your income tax return and it gets rejected. You will get an error message that says a tax return has already been filed under your Social Security number.
You could also find out you’re a victim by receiving an unexpected letter from the IRS. If someone uses your Social Security number to file a federal income tax return before you do, the IRS may send you a letter notifying you of the duplicate return. In addition, if someone has used your Social Security number to get a job, the IRS may send you a letter about unreported wages.
Keep in mind that the IRS will never contact you via email, text, or social media asking for personal or financial information.
What should I do if I’m a victim?
Start by filling out the IRS Identity Theft Affidavit, Form 14039, immediately. Then, call the IRS Identity Protection Specialized Unit (1-800-908-4490).
You should also ask the IRS to provide you with an Identity Protection Personal Identification Number (IP PIN). Use that on your federal income tax return (near the signature line on page 2 of the Form 1040) to alert the IRS that it is really you filing the income tax return. And this year, file on paper.
Once this is taken care of, pull copies of your credit reports and scan them for information you don’t recognize. Request a fraud alert from one of the three national credit reporting agencies (when an alert is requested with one agency it is also sent to the other two), and apply a security freeze to your credit files. A security freeze is designed to prevent the information in your credit file from being shared with others and to prevent credit grantors from granting credit in your name.
Submit an Identity Theft Affidavit to the FTC, and bring a copy of it to your local police department to file a police report. The report and affidavit will make up your Identity Theft Report, which will help you prove to the credit reporting agencies and your creditors that you were a victim of identity theft.
Most police departments now take identity theft seriously. If they are hesitant to issue a report, be polite but insist that you need to get the incident on record and that you also need a record number to give to the IRS.
Tips to help you catch identity theft early
Check your credit report regularly for errors or accounts you don’t recognize. You’re entitled to one free credit report each year from each of the three national credit reporting agencies through AnnualCreditReport.com. To monitor your credit file more frequently, consider signing up for a credit monitoring product, which can alert you to key changes to your Equifax, Experian, and TransUnion credit files.
If you have recently given out your Social Security number or driver’s license information to potential employers, doctors’ offices, or other companies, make a note and check your credit report 30 days later to see if any incorrect information appears.
Finally, if you have recently had a baby and registered his or her Social Security number with the hospital, check the baby’s credit report every year. Yes, I know—babies don’t have credit. That’s precisely why they are tempting targets for identity thieves. Thieves know no one will be using that number for a decade or more, so they use it instead. Keeping an eye on your family’s credit reports can help you detect identity theft early.
Eva Rosenberg, EA is the publisher of TaxMama.com ®, where your tax questions are answered. She is the author of several books and ebooks, including Small Business Taxes Made Easy. Eva teaches a tax pro course at IRSExams.com and tax courses you might enjoy at http://www.cpelink.com/teamtaxmama.