As the April 15 tax filing deadline looms, it's important to know that fraudulent tax refunds are on the rise. Last year, the IRS reported losing an estimated $6.5 billion in fraudulent tax refunds, and this year's losses are projected to be even higher.
Thieves can commit tax refund fraud in a variety of ways, but the two most common methods include using a victim's Social Security number to file a fraudulent return or actually stealing tax refund checks out of the mail.
Fortunately, there are some simple ways that taxpayers can minimize their chances of their return falling into the hands of a tax fraud thief.
1. Opt to Have Your Refund Direct Deposited
The idea is simple: If you choose to have your refund direct deposited into your account, there won't be a tax refund check or a prepaid debit card available for thieves to physically snatch.
When taxpayers choose to e-file and direct deposit their refunds, it's not only the safer way to go, but it's also more timely, with individuals receiving that money as soon as 10 days after filing.
2. File Early
If you file early, criminals won't have a chance to file a fraudulent return on your behalf. Since you already beat them to it, the IRS wouldn't process and would instead flag the second return.
If you didn't receive your W-2s and other tax documents early enough this year, check in with your employers and providers of other tax documents to get these files delivered via email rather than snail mail going forward. This will give you an advantage when tax season rolls around next year.
3. Be Mindful of Your Tax Talk
In my own Facebook feed, I've recently seen comments like, "Tax time stinks!" or "Should probably start thinking about those taxes..." These kinds of statements can tip tax thieves off to the fact that you haven't filed yet and are an easy victim. Sure, you monitor your Facebook friends, but social media sites are still public outlets and you never know if that high school classmate you friended years ago has turned to tax fraud as a hobby.
Keep your conversations offline and even when in public, be mindful of what you discuss with others. You never really know who might be listening or eyeing your wallet to grab the type of personal info that might lead them to file a fraudulent return on your behalf.
4. Track Your Refund
If you've filed your return and have been waiting for an extended period of time for your refund, consider tracking it. You can visit irs.gov/Refunds or use the IRS2Go mobile app to check on the status of your refund.
5. Use an Identity Protection PIN
Before you file, you can contact the IRS for an identity protection PIN that is good for just one year. (You'll have to request a new one next year.) This is used as a preventative measure to better protect taxpayers' identity. This can be received on the IRS website or by calling 1-866-704-7388.
6. Use Secure Networks
When e-filing your refund, be sure your networks are secure. You should never file electronically over a public network or one that's not password protected. Also be sure to keep your antivirus software up to date.