With over $30 billion paid in tax refunds for the year 2013, the GAO (Government Accountability Office) estimates that 19 percent, or $5.8 billion of it was stolen. If you have completed your tax preparation and are due a refund, you may think the hard part is over and the spending can begin. But can it? With tons of thieves out there looking to score refunds of their own, it makes more sense than ever to know how to protect your hard earned money.
1. Tax Preparation Tip: Identity thieves
Those pesky identity thieves can cause tons of trouble including opening credit cards in your name, cashing your checks, and even taking out loans. Another of the dangers of letting your identity fall in to the wrong hands is the ability for them to cash in on your tax return. With a little creative computer work or a phone call, they can call the IRS and request your refund check be delivered to their address or directly deposited in to an overseas account, never to be seen again.
Tax preparation tips to stop identity thieves:
- Use the direct deposit method offered by the IRS to get your refund. Not only does it eliminate steps that allow identity thieves to interfere, it also limits the time in which they can snag it for themselves.
- Do not use the prepaid card option for your refund. It might be a good option for those without a checking account. However, they can easily be stolen from your mailbox, wallet, or even hacked online. Worst of all, these cards belong to whoever has possession of them, so there is no way to track or possibly even cancel them.
- E-file whenever possible. Just like using direct deposit for your refund, filing electronically eliminates steps in which your return gets to the IRS. This includes when you or your tax preparation pro fills them out, possibly makes copies, puts them in the mailbox, a postal carrier picks it up, delivers it to a branch where more and more workers handle it, another postal carrier delivers it to the IRS, and more people at the IRS handle it until the return is successfully processed.
- Use a strong password when filling out any tax information online. Far worse than having your Facebook page hacked, someone with access to your taxes has everything they need to make your life miserable. A few of the most common and thusly worst passwords include: birthdays, phone numbers, “password”,” “password1,” and so on.
- If you do mail your tax forms and returns, be sure to get the tracking option and put it directly into a post office mailbox that cannot be opened by lay people, rather than your own mailbox with the little flag raised.
2. Tax Preparation Tip: Choose your tax preparation pro carefully
Even those who do tax preparation with the best of intentions can still put you in danger by not securing your data. They have your most sensitive data, but do they protect it against would be hackers and other sources of danger? In addition, do they also lock down their own computers in such a way that an unscrupulous co-worker or tech thief could not acquire this data?
There is also a certain vulnerability when using tax preparation software. With giants like Target, Home Depot, Blue Cross Blue Shield, and others getting hacked, is the maker of your tax preparation software next?
Tax preparation tip: Monitor the progress of your return when using tax preparation software or any online filing system. By following its progress you can ensure your refund goes to the right spot, as well as stop any problems before they get out of hand.
3. Tax Preparation Tip: The IRS does it again
Even if you avoid all of the above, the IRS itself is also vulnerable. In a system only they could think of, they send refunds first and verify identities later, which makes the latter part useless. By their own estimates they are paying billions in fraudulent returns, and according to their own data, the number of taxpayers who have been assigned “identity protection PINs” – aka victims of identity theft — has tripled. This growth in crime is the fastest growth of any type of consumer complaint.
4. Tax Preparation Tip: Report Fraud
If you suspect or know that you have been a victim of tax refund fraud or any other type, click here to get a list of numbers and forms to report it. This can help catch the thieves, as well as limit your liability.
Tax Preparation in Houston
And if you are in need of expert tax preparation services in Houston or the surrounding area, please contact me.