Happy New Year! If you’re among the many Americans making a financial resolution in 2017, you’re on to something. Those who made financial resolutions at the start of 2016 were more optimistic, debt-free and financially secure than those who didn’t, according to Fidelity’s 8th Annual Financial Resolutions Study. While most people resolve to save more, pay down debt and spend less, here’s another wise move: File your taxes early—to fight income tax fraud.
Why the rush? First and foremost, tax refund fraud—currently the fastest growing form of identity theft—in which a thief files for your tax refund before you’re able to claim it yourself.
All a thief needs to attempt to perpetrate this crime is your name, date of birth and Social Security Number. That’s not a very high mark in this day of record-breaking data breaches. The best defense against this crime is to file your taxes as early as possible—before a thief tries to beat you to it. That’s true whether or not you’ve been the victim of a breach (but especially important if you have been).
Here’s how to get a jump on it:
Get organized now. First, gather your income statements (i.e. W-2s and 1099s) as soon as you receive them and make sure every number is correct. If the numbers on your forms don’t match the numbers the IRS receives, your return will get kicked back and you’ll have to regroup. So if you’re questioning anything, check in with your employer. Next, pull out last year’s tax return and use it as a guide. It’ll trigger your memory on which credits and deductions you might qualify for again and any new ones you might be eligible for this year (I’m looking at you job hunters, new parents, and recent graduates). You’ll also be able to see any carryovers from last year from charitable contributions or capital losses.
File as early as January 23rd. Tax-filing season kicks off on January 23. If you think you’ll owe taxes—and you’re already worried about coming up with the funds to pay them by then—know that you can file your return early and pay your bill later. The money just needs to be in by the filing deadline on April 18. You get three extra days this year, because the 15th falls on a weekend and Monday, April 17, is a holiday.
The IRS doesn’t make house calls. If this tax-filing season is anything like last year’s, then don’t be surprised to get a scam call from an IRS impersonator. Since October 2013, the Treasury Inspector General for Tax Administration has received reports of nearly 900,000 scam calls that have resulted in more than 5,000 victims collectively paying more than $26.5 million. Remember, the IRS will not pick up the phone to call you. If you owe money, you’ll receive your bill in the mail. Before you pay it, verify it yourself by calling a) your tax preparer and b) the IRS at 800-829-1040. If you don’t owe anything, then report scammers to the Treasury Inspector General for Tax Administration at 800-366-4484.
The IRS won’t email you either. Watch out for phishing emails from IRS impersonators, as well. The IRS will never contact you by email, text, or social media. If the IRS needs information, it will contact you by snail mail. If you’re concerned—especially if your information may have been compromised in a recent breach—then phone the IRS Identity Protection Specialized Unit at 800-908-4490. You can also request an identity protection PIN. It’s a six-digit number assigned by the IRS to eligible taxpayers that helps prevent the misuse of your Social Security number on fraudulent federal income tax returns.
When e-filing, use a secure network. More than 128 million taxpayers filed their taxes electronically last year. If that’s you this year, then make sure you’re using a secure internet connection—not a publicly available Wi-Fi hotspot, even one that’s password protected. If you’re safe about it, filing electronically comes with a few perks. You get (almost immediate) confirmation that your return has been received, whether it’s in good shape and—in some cases—your refund back faster. Plus, using tax-filing software can minimize mistakes, especially math-related ones. (On average, 20 percent of paper returns have an error, compared with 1 percent of electronic returns.)
Authored by LifeLock Educational Advisor Jean Chatzky, with Kelly Hultgren