If you live in the US, you should be receiving all your 2020 tax statements. That means that it’s that time of year again: tax time. Sure, they’re not technically due for another couple months, but now is the time to be proactive if you want to avoid being the victim of a tax scam. Here are some quick tips to protect yourself.
You might want to file your taxes before the bad guys do it for you. One of the common techniques for committing tax fraud is to file someone else’s taxes, claiming a huge refund that you’re not due – and then pocketing the money. One way to defeat this is to just be sure to file as early as you can.
A more reliable protection against fake returns being filed on your behalf is to register for an Identity Protection PIN (IP PIN) with the IRS. Until this year, you had to be a confirmed victim of identity theft to get one, but starting in 2021, anyone can apply for this. For some reason, this PIN is only valid for one year, so you’ll need to repeat this process every year. You will go through a rather arcane identity verification process, but it will tell you what sorts of information you need to have on hand before you begin.
Watch Out for Tax Phishing Scams
Fake IRS emails and phone callers will say that you’ve done something horribly wrong and owe lots of money. You must immediately send them money or face additional fines, jail time, etc. Others will call wanting to “verify” (i.e., steal) your information. These are scams. This is not how the IRS operates. So, if you get such a call, just hang up. If you want to be sure, you can always just call the IRS directly. Furthermore, if you get an email that appears to be an IRS scam, you can forward it to firstname.lastname@example.org. Alerting the IRS will help them to track down these criminals and hopefully prevent them from harassing other people.
Send Tax (and Other Sensitive) Files Securely
With COVID, we’re all doing most things remotely when we can. If you need to exchange tax documents, financial statements, or honestly any files that contain sensitive information online, you need to do it securely. With any luck, your tax person already has a secure system in place to do this. But if not, then you’re going to want to read my guide on how to securely transfer files online.
Beware Bait & Switch on “Free” Tax Filing
One more bit of tax filing advice: not all free online tax filing is truly free. Big name tax filers have gotten into deep trouble in the past for pulling the class bait-and-switch scheme: offering “free” filing and then telling you that your “special situation” requires you to upgrade to a non-free version. That’s often not true, and there are actually strict laws in place now to try and prevent this. Nevertheless, you need to know how to find the truly free filing options mandated by the IRS. This article will tell you how.