Still haven't filed your taxes this year? This fact will get you moving: Tax refund theft is the fastest-growing crime in the country, according to a government report.
It happens when crooks use your Social Security number to file before you and steal your refund. Victims can wait six months or longer to recover their money. The Federal Trade Commission's Consumer Sentinel Report showed a 43 percent growth in this type of crime and the IRS reported a 60 percent increase in suspected tax return fraud for the 2012 tax season.
The FTC releases the Consumer Sentinel Report annually, and it's used to track the most common types of fraud based on consumer complaints. As we recently reported, identity theft once again topped the FTC's list of complaints with roughly 370,000 complaints filed last year. Tax- and wage-related fraud was by far the fastest growing type of identity theft.
Thieves use two common methods for tax-related identity fraud. Under the first, the thief fraudulently files a tax return in the victim's name and claims the refund. Victims usually find out when they receive a notice from the IRS that more than one tax return was filed in their name.
In another scenario, identity thieves get paid for work while using the victim's identity on tax forms. In this instance, the thief would owe money come tax time, and the victim would be stuck with the bill. Victims discover the problem when their tax forms indicate they received wages from an unknown employer for work they have not completed.
So what can you do to protect yourself from tax-time identity theft? Our experts recommend following these six steps:
• Never, ever give out your Social Security number unless you have a very good reason for doing so. This is the key piece of information that identity thieves need to file fraudulent tax returns.
• Store tax forms in a secure location such as a safe or a safe-deposit box. Avoid saving forms on a computer, but if you must, make sure they are password-protected and kept on an encrypted drive.
• Use a reputable tax preparer or tax preparation software. Many tax-related identity theft schemes involve criminals falsely identifying themselves as tax professionals.
• Double-check your tax forms as soon as you receive them. If they report that you earned money that you know you did not, it's the first clue that someone has been illegally using your identity.
• Retrieve W-2s, 1099s or other tax forms that come by mail promptly.
• Opt for direct deposit of your return. You'll get it faster, giving criminals less time to file and benefit from fraudulent returns.
It happens when crooks use your Social Security number to file before you and steal your refund. Victims can wait six months or longer to recover their money. The Federal Trade Commission's Consumer Sentinel Report showed a 43 percent growth in this type of crime and the IRS reported a 60 percent increase in suspected tax return fraud for the 2012 tax season.
The FTC releases the Consumer Sentinel Report annually, and it's used to track the most common types of fraud based on consumer complaints. As we recently reported, identity theft once again topped the FTC's list of complaints with roughly 370,000 complaints filed last year. Tax- and wage-related fraud was by far the fastest growing type of identity theft.
Thieves use two common methods for tax-related identity fraud. Under the first, the thief fraudulently files a tax return in the victim's name and claims the refund. Victims usually find out when they receive a notice from the IRS that more than one tax return was filed in their name.
In another scenario, identity thieves get paid for work while using the victim's identity on tax forms. In this instance, the thief would owe money come tax time, and the victim would be stuck with the bill. Victims discover the problem when their tax forms indicate they received wages from an unknown employer for work they have not completed.
So what can you do to protect yourself from tax-time identity theft? Our experts recommend following these six steps:
• Never, ever give out your Social Security number unless you have a very good reason for doing so. This is the key piece of information that identity thieves need to file fraudulent tax returns.
• Store tax forms in a secure location such as a safe or a safe-deposit box. Avoid saving forms on a computer, but if you must, make sure they are password-protected and kept on an encrypted drive.
• Use a reputable tax preparer or tax preparation software. Many tax-related identity theft schemes involve criminals falsely identifying themselves as tax professionals.
• Double-check your tax forms as soon as you receive them. If they report that you earned money that you know you did not, it's the first clue that someone has been illegally using your identity.
• Retrieve W-2s, 1099s or other tax forms that come by mail promptly.
• Opt for direct deposit of your return. You'll get it faster, giving criminals less time to file and benefit from fraudulent returns.
