You file your tax return and wait patiently for the refund to hit your bank account. But instead, you receive a letter from the IRS notifying you that someone has fraudulently filed taxes under your name. Now what?
Although dealing with fraudulent tax returns can be a nuisance and it takes time for the IRS to investigate, you’ll most likely still get your refund.
How To Know Someone Fraudulently Filed Taxes in Your Name
It’s possible that the thief filing your tax return doesn’t have all the information they need to fill out the return properly. If the IRS identifies any issues with a return, they will send you a letter before issuing any refunds. When this happens, you’ll be able to flag the initial return as fraudulent. Then you can file your tax return normally.
Although the IRS has systems in place, it doesn’t always detect issues with returns. If the IRS doesn’t catch the fraudulent return filed in your name, you won’t find out until you try to file and your refund is denied.
7 Immediate Actions Steps If a Fraudulent Tax Return is Filed in Your Name
If you find out that someone has fraudulently filed your tax return, it’s likely someone has access to your Social Security number. To reduce the damage done by identity theft and resolve any issues involving the fraudulent tax return, it’s important to take action immediately:
- If the IRS sends you a notice, follow their instructions.
- File a police report. It’s unlikely that local law enforcement can do much to catch the thief, but a police report will be a useful document when filing future reports with government agencies. It can also help if you need to stop debt collectors from contacting you about debts you didn’t accumulate.
- File a report at IdentityTheft.gov. They will help you complete the IRS Identity Theft Affidavit, Form 14039 and provide you with a step-by-step recovery plan.
- Put a freeze on your credit. To freeze your credit, contact all three credit bureaus (Equifax, Experian, and TransUnion). Placing and lifting a credit freeze is free and it does not affect your credit score.
- Request a fraud alert with any of the three credit bureaus. Once a fraud alert is placed on one it triggers an alert with the other two. A fraud alert puts a notice on your credit file that requires creditors to verify your identity before approving you for new debts.
- Keep a close eye on your credit report and financial accounts for any fraudulent activity. If you see anything suspicious, report it to three credit bureaus or the associated financial institution immediately.
- Request a copy of the fraudulent return using Form 4506-F. This can help you determine if any family information was compromised—such as your child’s Social Security number.
How to Prevent Identity Theft
Although it’s impossible to completely avoid identity theft, there are steps you can take to protect yourself:
Always Protect Your Social Security Number
Be cautious about who you give your number to and always try to give alternate information if possible. Keep your Social Security card and other important documents in a secure location. For digital documents containing sensitive information, save them in encrypted, password-protected files. Shred all documents that contain your personal information before you throw them away.
File Your Taxes Early
Oftentimes, thieves will try to file right when tax filing opens in hopes that you haven’t had the time to file yet. By filing early, you can shrink the window of time thieves have to file in your name.
Only Hire Reputable Tax Preparers
If you hire someone else to do your taxes, find a professional with good references and expertise. You can check whether preparers hold credentials recognized by the IRS. To help with your search, use the IRS directory to research tax professionals in your area.
Take Steps to Improve Your Online Security and Cyber Knowledge
Whether it be implementing multi-factor authentication, using a password manager, updating your privacy and security settings, or learning the signs of a phishing attempt, it’s crucial to reinforce your security.
You may not know if someone used your identity to file a fraudulent tax return until you try to submit your taxes. No matter when you find out, it’s important to jump into action right away. If you suspect that someone has stolen your identity and used it for a fraudulent tax return, contact the IRS, file reports to the proper authorities and take action to protect and monitor your credit.