Me, Myself and I: Protecting Your Identity When Doing Taxes

When you think of December, you probably think of the holidays, warm sweaters, and family. You may not even know that December is also National Identity Theft Awareness and Prevention Month – but you should.

While you're busy collecting your receipts and tax documents getting ready to have your taxes prepared in the New Year, there are people getting ready to steal your identity and your tax return. It's a very real threat for millions of Americans each year. But the good news is that there's plenty you can do to protect yourself and your tax return. Let's start with how criminals even get your information in the first place.

How ID Theft Happens

Identities can be stolen by accessing computer programs, going through trash, sending out e-mails requesting personal information under the guise of a business you are using—the IRS even put out an alert back in October about telephone scams.

Once your personal information is in the hand of criminals, they use the stolen names and Social Security numbers to create fake W-2's with false wages and withholdings that are then used to file fraudulent tax returns. The false earnings and withholdings are set up to land them a big refund, all before the actual taxpayer even knows what's going on.

Typically, taxpayers don't realize anything is wrong until they file their taxes and find out a return has already been filed under their social security number. The IRS is working hard to combat identity theft. The IRS also has processes in place to help taxpayers whose identity has been stolen or compromised, but the taxpayer is then facing an increase in time to process their tax return. And for those due a refund, that would be delayed as well.

How to Protect Yourself

So what can you do? The best way to protect yourself is as simple as filing your own return early. As soon as you have all of your tax documents, get that return completed before someone else can file in your name. In addition to filing early, you should:

  • Always shred any documents containing personal information that you are disposing of.
  • Make sure to choose strong and unique passwords for online accounts year round.
  • Only give out your social security number when it's absolutely required, like when you are filing your tax return.
  • Secure personal information in your home.
  • Protect your personal computers by using firewalls and anti-spam/virus software, update your software with security patches, and change passwords regularly for Internet accounts.
  • Don't give personal information over the phone, through the mail or on the Internet unless you have initiated the contact or you are sure you know with whom you are communicating.

The IRS offers additional tips to both protect yourself and what to do if you think you've been a victim of ID theft on their website. It's scary, for sure, but there are easy steps you can take. Many Jackson Hewitt offices will be open on January 6, 2014, or even earlier, so when you're ready, stop by and your local Tax Pro will help you get started.