Look out for ID theft this tax season

Look out for ID theft this tax season

By / State News / Tuesday, 26 January 2016 05:00

RALEIGH, N.C. - Tax time is right around the corner, and unfortunately ID thieves know it. Remember to keep your guard up against tax identity theft this year.
Each year, thousands of Americans’ personal information is stolen by thieves who use it to file tax returns and collect large refunds.  In many cases, victims don’t find out about the fraud until their own legitimate tax returns are rejected by the IRS, which says they’ve already processed a return under the same name and social security number.
To avoid tax return ID theft, protect your personal and financial information:
• Store your social security card in a safe, secure location.
• Never carry your social security card in your wallet or purse unless you need it that day.
• Shred old, unneeded documents that include your SSN.
• Avoid using your SSN online when possible. If you do need to enter your SSN into a website, look for an “https” at the beginning of the web address to ensure security.
• Limit the odds that a thief will collect your refund by filing your tax return as soon as possible.
• If you hire a tax preparation service to file your return this year, make sure the preparer is legitimate.
If the IRS tells you that they’ve received your return already this tax season, file a complaint with the Federal Trade Commission, consider placing a fraud alert on your credit reports, and contact the IRS to learn about filing an Identity Theft Affidavit.
Taxpayers are often able to work with the IRS to sort out their tax returns and get their refund.
For more information on making sure filing your taxes goes smoothly, take a look at our tax time tips.
Points to Keep in Mind When Choosing A Tax Preparer
If you pay someone to prepare your tax return, the IRS urges you to choose that preparer wisely. Taxpayers are legally responsible for what’s on their tax return even if it is prepared by someone else. So, it is important to choose carefully when hiring an individual or firm to prepare your return. Most return preparers are professional, honest and provide excellent service to their clients.
Here are a few points to keep in mind when choosing someone else to prepare your return:
• Check the person’s qualifications. Ask if the preparer is affiliated with a professional organization that provides its members with continuing education and resources and holds them to a code of ethics.New regulations require all paid tax return preparers including attorneys, CPAs and enrolled agents to apply for a Preparer Tax Identification Number — even if they already have one — before preparing any federal tax returns in 2011.
• Check on the preparer’s history. Check to see if the preparer has a questionable history with the Better Business Bureau and check for any disciplinary actions and licensure status through the state boards of accountancy for certified public accountants; the state bar associations for attorneys; and the IRS Office of Professional Responsibility for enrolled agents.
•  Find out about their service fees. Avoid preparers who base their fee on a percentage of your refund or those who claim they can obtain larger refunds than other preparers.
• Make sure the tax preparer is accessible.Make sure you will be able to contact the tax preparer after the return has been filed, even after the April due date, in case questions arise.
• Provide all records and receipts needed to prepare your return. Most reputable preparers will request to see your records and receipts and will ask you multiple questions to determine your total income and your qualifications for expenses, deductions and other items.
• Never sign a blank return. Avoid tax preparers that ask you to sign a blank tax form.
• Review the entire return before signing it.Before you sign your tax return, review it and ask questions. Make sure you understand everything and are comfortable with the accuracy of the return before you sign it.
• Make sure the preparer signs the form and includes their PTIN.A paid preparer must sign the return and include their PTIN as required by law. Although the preparer signs the return, you are responsible for the accuracy of every item on your return.The preparer must also give you a copy of the return.
Tax Time Tips
• Guard your personal information. Identity thieves can use your Social Security number to take out loans, open credit cards or even collect your tax refund Email is vulnerable to hackers, so avoid emailing your Social Security number or other confidential information to a tax preparer or accountant. If you’re using a website to file your taxes, make sure your information is protected by looking for the lock icon on the address bar.
• Beware of scammers posing as the IRS. Be wary of anyone who calls or emails you and offers to help with your taxes, demands tax payments, or claims to be with the IRS. If the IRS needs to contact you, it will do so by mail—not by email, phone or text message.
• Watch out for tax refund thieves. Tax refund theft is a growing problem. One way to help avoid becoming a victim of this scam is to file your tax return early, before the crooks file their fake return in your name.  If you receive a notice or letter from the IRS indicating that more than one tax return was filed in your name, respond immediately to the IRS employee whose contact information was provided. You will also need to fill out IRS Form 14039, Identity Theft Affidavit.
• Think twice before you opt for an “instant” or “rapid” refund. Some tax preparers and banks offer a refund anticipation check (RAC). This is a paid service for taxpayers who don’t have a bank account to use for direct deposit of their refund, or don’t have the money to pay for tax preparation assistance. There’s a fee (typically about $30) to set up the RAC system. The preparer deducts that fee, their tax preparation charges and other fees from the eventual refund. After all that, there may not be much of your actual refund left.
• Get your refund quickly without paying any extra charges. If you file your taxes electronically and have your refund deposited directly into an existing bank account, your refund will probably arrive in less than three weeks. If you don’t have a bank account, you can you file your taxes electronically and get a refund check in the mail, or get your refund loaded on a prepaid card you already have.
• You might be entitled to a refund even if you don’t owe income taxes. Call the IRS or visit www.irs.gov/eitc  to learn more and see if you qualify for an Earned Income Tax Credit (EITC). The EITC is a refundable federal income tax credit for low-income working individuals and families.
Source: North Carolina Department of Justice; U.S. Internal Revenue Service.

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