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Prevent Tax ID Theft – Here’s Your Checklist!

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Prevent Tax ID Theft – Here’s Your Checklist!

Key Points

  • AFL Contributor, Joanne S. Reilly, Ameriprise

    The IRS estimates that it paid $3.1 billion in fraudulent identity theft refunds in a recent year.

  • Identity thieves can use your information to file fraudulent returns in your name while they pocket the return.
  • Get your personal identification number (PIN) early and keep your paperwork secure to help prevent your personal financial information from getting into the wrong hands.

With the continued increase of electronic filing, it’s important to watch out for the latest type of fraud: tax identity theft. In these scams, thieves use your tax information to file fraudulent returns in your name in hopes of pocketing hefty refunds. The IRS estimates that it prevented or recovered $22.5 billion in attempted identity theft refund fraud, but paid $3.1 billion in fraudulent identity theft refunds, according to a report from the U.S. Government Accountability Office1.

What you can do to prevent tax identity theft

  1. Get your personal identification number (PIN) early. If you know you’ll be filing electronically, go to the website and get your electronic filing personal identification number (PIN) number. Once you have your PIN, no one else can file under your name without it.
  2. File as soon as you receive all your tax statements. Once a return has been filed under a specific Social Security number, the IRS won’t allow a second. If you file once you receive all your tax statements, you’ll lessen the chances of a thief filing in your name.
    Before filing your tax return, understand that:

    • Depending on IRS mailing deadlines and the types of accounts you own, you may receive more than one tax statement package from Ameriprise Financial or your financial adviser.
    • Each client in your household may receive a tax statement package for accounts on which they are the designated taxpayer.
    • You may receive updated tax statements if you own investments that are likely to experience income reclassification after year-end tax statements have been generated. If you receive updated tax statements after you file your tax return, you may need to file an amended return. Work with a qualified tax professional to determine how the changes may affect you.
  3. Use your shredder. Shred any papers with account numbers, your Social Security number or your date of birth. The trash can is still an identity thief’s favorite hunting ground.
  4. Keep your paperwork in a secure spot. Tax and other identity thefts are often committed by people who know the victim. Don’t leave your papers lying around the house for anyone to see.
  5. Avoid tax scams. Phishing rises dramatically during tax season. To reduce susceptibility, never provide your personal information over the phone, through the mail or on the Internet unless you have initiated the contact and are sure of the recipient. If you receive an unexpected or suspicious email, do not open any attachments or click on any links. The IRS only uses the United States Postal Service to communicate with taxpayers for initial contact. The agency never uses email and may sometimes use the phone but only after initial contact has been made via mail. If you receive a phone call or email claiming to be from the IRS, it is likely a scam and you should not respond.
  6. Check out your tax preparer. If you are using a tax preparer you don’t know, check the Better Business Bureau’s website and do a general online search to make sure the individual has a good reputation and no complaints have been filed against him or her.

If you think you’re a victim of identity theft

If you suspect thieves have gotten hold of your personal financial information, there’s plenty of help online from the government to help you sort out the situation. Check out these two useful web pages:

Financial adviser Joanne Reilly, CFP ® , CDFA™, APMA ® (Joanne Reilly and Associates) is a Certified Financial Planner with more than 30+ years of successful experience helping her clients to build exciting futures as well as weather unexpected circumstances. In addition to holding the CFP designation, she also holds the CDFA (Certified Divorce Financial Analyst designation) as well as the APMA (Accredited Portfolio Management Advisor) designation.

Joanne, affiliated with Ameriprise and based in Boston, MA, is licensed to practice in multiple states throughout the country (N, S, E, W, as well as the mid-section). A graduate of Smith College, her previous positions included Bank of America (Senior Vice President, Investments and Insurance).

As an After-Fiftier, she loves Boston – but also enjoys travel, time with friends and family, tennis, music and the fine arts. She also makes time for an important priority in her life: The Haven Project. The Haven Project is a growing non-profit organization assisting the needs of homeless young adults on the north shore of Boston. Their mission? EQUIP and EMPOWER the growing population of unaccompanied and at-risk young adults ages 17-24 in the geographical area with the skills and support they need to achieve their life’s purpose.

Visit Joanne on her website at Joanne Reilly and Associates, on Facebook and on Linkedin.

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