Criminals will stop at nothing to get their hands on your money, whether in the form of trying to steal your credit card number or hack into your bank account. But criminals tend to be especially savvy at matters related to tax fraud.
Tax fraud has long been a problem. But a recent report by BeenVerified found that fraudulent tax claims grew by 55.4% in 2022. And a big reason has to do with COVID-era relief programs, which opened the door to more opportunities to try to steal people’s money (think criminals calling people at random and asking for a verified bank account number to deposit an overdue stimulus check).
If you want to avoid falling victim to tax fraud, here are a few basic steps you can take to protect yourself.
You might get a call, text, or email from someone claiming to be from the IRS asking for your bank account details and Social Security number so they can process your refund or help you claim an overdue stimulus check you’re owed. Don’t respond. The IRS will not contact you out of the blue like that.
Similarly, you might get a threatening call from the IRS saying your wages will be garnished if you don’t authorize a wire transfer to satisfy an overdue tax bill. Again, that’s not how the agency works. Technically, yes, your wages can be garnished if you’re overdue on paying taxes, but you’ll get an official warning about that in the mail. So don’t buy into those fear tactics.
It’s a good idea to keep tax documents on hand for three years past each tax-filing deadline. So for example, this year, you’re filing 2022 taxes, and they’re due by April 18. You should then keep your 2022 tax documents around until April of 2025, because the IRS has that long to ask for more information about your 2022 tax return.
But if you have tax documents you’re safe to get rid of, make sure to shred them rather than just tossing them out. That eliminates the possibility of a criminal getting your personal details and using them to their benefit.
A criminal might try to file a tax return in your name and divert your refund to a bank account only they can access. A good way to get ahead of that is to file your taxes early.
The IRS is set up to reject tax returns as duplicates if it gets two returns with the same Social Security number. So if you get yours in first, in that scenario, the fraudulent one will get bounced as a duplicate. And at that point, a criminal is unlikely to attempt to re-file that return, since it would likely mean being exposed and facing potential charges.
It’s unfortunate that tax scams are becoming more common. But if you take these steps, you can avoid getting hurt by one.
This article was written by Maurie Backman from The Motley Fool and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to [email protected].