Prevent Tax ID Theft

(Don't Wait)

There are many reasons to file your taxes as early as possible (including just to get it over with). In recent years, tax identity theft has become a hot scam. This is where someone uses your Social Security number to file a return in your name and get a refund. Once your Social Security number has been used once, the IRS will not accept another return for that tax year. This means that you might not find out until you try to file your own return that someone else has filed first.

WHAT ARE YOU WAITING FOR?

You need some documents before you can file your taxes. These are typically mailed to you or available to download from a secure website no later than January 31 of the following year. Create your own personal checklist of any financial documents you’re waiting for, including:

  • W-2s from all your employers. You’ll get a W-2 if you were a part-time or full-time employee and you paid employment taxes through your paycheck.
  • Form 1099s from all contract positions. If you were self-employed or had a side gig doing freelance work on a contract basis, you should get 1099s from any client who paid you more than $600 last year. (1099s also apply to miscellaneous income such as prizes and awards.)

Young man with bike thinks about taxes and preventing tax identity theft.

RESOURCES WE LIKE

IdentityTheft.gov

  • Student loan interest statement (Form 1098-E). If you are currently repaying a loan, you will receive a 1098-E from the loan provider showing how much you paid in interest last year.
  • Mortgage loan interest statement (Form 1098). If you paid more than $600 in mortgage loan interest, the mortgage lender will send you a 1098.
  • Health Savings Accounts (1099-SA). If you have an HSA, you will get a 1099-SA showing how much you withdrew from the account. Flexible Spending Accounts (FSAs) are not reported on your tax return.

Other considerations before filing your taxes depend on your circumstances. If you are co-parenting or married and filing separately from your spouse, you’ll need to decide who is going to claim each of your children. Or if you’re just starting out and living at home, you might still be a dependent on your parents’ tax return. Make a list of questions you have about your taxes and start seeking answers as early as possible. If you do it a little bit at a time, it doesn’t have to be overwhelming.

If you earned less than $55,000 last year, you are eligible for free in-person tax help from the IRS’s Volunteer Income Tax Assistance (VITA) program.

REPORT TAX ID THEFT

You hope it never happens, but if you discover you are the victim of tax identity theft, here are the steps to take.

  • Alert your financial institutions that your identity has been stolen.
  • Read through the IRS instructions for reporting identity theft.
  • File a complaint at IdentityTheft.gov.
  • Place a fraud alert on your credit report by contacting one of the three major credit bureaus (Equifax, Experian, TransUnion). That agency should notify the other two.
  • Clean up any false accounts the identity thieves created.

Woman browses phone while thinking about preventing tax identity theft.

Once you get the immediate damage under control, you will need to fill out IRS Form 14039, print it out, attach it to your real return, and mail it to the IRS.

As always, it’s important to protect yourself online. The IRS will never initiate contact with you by email to request your personal information. They won’t text you or contact you through social media. Never give away your Social Security number or financial account numbers unless you are very sure of the legitimacy of the request. You always have a right to ask for more information. If someone is pressuring you for your private details, it could be a scam. Report suspicious requests to [email protected].

As always, we’ve got your back. — The On Your Own Team End of article insignia



[Any reference to a specific company, commercial product, process or service does not constitute or imply an endorsement or recommendation by On Your Own, the National Endowment for Financial Education or any of its affiliate programs.]