10 tips to help prevent tax identity theft

Every year, criminals use stolen Social Security numbers to file fake tax returns and steal refunds before taxpayers even know what happened. And for those affected, recovering that money can take up to two years.

Let’s walk through ten smart moves that can help prevent tax identity theft.

1. Get an IRS identity protection PIN

An IRS Identity Protection PIN (IP PIN) adds a powerful extra lock to your tax return. An IP PIN is a six-digit number issued by the IRS that prevents someone else from filing a tax return in your name. Even if a tax scammer has your Social Security number, they won’t be able to submit a return without that PIN.

You can request one directly from the IRS through its official site. If you’re serious about preventing tax identity theft, this is one of the most effective first steps.

2. File returns early

Filing your tax return as early as possible reduces the window scammers have to beat you to your refund. The earlier you file, the less opportunity a criminal has to submit a fake return first.

If a thief files before you do, you may find yourself dealing with the headache of a delayed refund — or worse, discovering that your tax refund was already stolen.

When it comes to preventing tax identity theft, speed matters. Filing early is one of the simplest defenses against tax fraud.

3. Be aware of impersonator scams

Recognizing IRS impersonation scams can help you avoid handing over sensitive data. Scammers frequently pose as fake tax preparers or IRS agents via phone, email, text, or social media. They may threaten arrest or demand immediate payment.

In reality, the IRS doesn’t initiate contact via text or social media, and they don’t demand gift cards or wire transfers as payment.

4. Use unique passwords and two-factor authentication

Using strong, unique passwords and enabling two-factor authentication (2FA) helps secure your tax accounts.

If you use the same password for your tax software, email, and banking apps, a single breach could expose everything. An identity thief may use the leaked password to get into as many of your accounts as possible. A fix for this would be to use a password manager to generate and store complex passwords.

Adding 2FA means even if someone guesses your password, they’d still need a second verification code to access your account. It’s a password security practice that everyone should take advantage of when available.

5. Protect your Social Security number

Protecting your Social Security number is one of the most important ways to reduce the risk of tax identity theft. Many forms of tax fraud begin with the exposure of personal data.

The fewer places your SSN lives, the safer you are. Only share it when absolutely necessary, and ask why it’s required before providing it.

6. Avoid using public Wi-Fi when filing or logging into your tax account

Don’t connect to public Wi-Fi while filing taxes to help prevent identity thieves from intercepting your data. It’s one of the best safety practices to help prevent identity theft.

Coffee shop networks and airport hotspots are more vulnerable to cybercriminals who want to track your information. Logging into tax software or IRS accounts on unsecured Wi-Fi increases your risk.

Instead, do this:

• File from your secure home network.
• Use a virtual private network (VPN) if necessary.
• Log out fully after each session.

7. Shred all tax documents

If you no longer need to keep tax records, shredding tax documents before discarding them helps prevent criminals from retrieving sensitive data. Old returns, W-2s, 1099s, and bank statements contain enough information for identity thieves to piece together a fraudulent return.

Before you toss paperwork:

• Identify expired tax records.
• Use a cross-cut shredder.
• Safely store documents you need to keep.

8. Send documents to a secure mailbox

Using a secure mailbox reduces the risk of mail theft during tax season. This bit of extra effort can help keep your refund out of the wrong hands.

Dropping your completed return into an unsecured mailbox overnight can invite trouble. Criminals sometimes “fish” for mail from collection boxes to steal checks or sensitive forms.

Safer options include:

• Taking mail directly inside the post office.
• Using certified mail.
• Filing electronically through secure platforms.

9. Limit where you share personal data

Limiting the amount of personal information you share online reduces your exposure to tax identity theft. The less information floating around, the fewer opportunities for tax fraud.

Data breaches, oversharing on social media, and unsecured online forms can all expose the details scammers need. If a website or caller asks for personal data, pause and verify.

Before providing your info, ask yourself:

• Is this request legitimate?
• Do they truly need this information?
• Can I provide less sensitive details?

10. Monitor your tax accounts

Monitoring your IRS and financial accounts can help you spot suspicious activity early. Note any additional tax records or incorrect information on tax forms.

Create an IRS online account and review it periodically. Watch out for:

• Unexpected tax transcripts.
• Notices about returns you didn’t file.
• Changes to direct deposit information.

Signs you’ve been affected by tax identity theft

If you suspect someone filed taxes in your name, you may notice warning signs, such as a rejected tax return or receiving a notice of an unknown employer. Watch out for:

• Rejected tax return: The IRS rejects your return because one has already been filed.
• Unknown employers: You receive a notice about income from an employer you don’t recognize.
• Notice of multiple filings: You get a letter stating multiple returns were filed under your SSN.
• Unpaid taxes: You’re unexpectedly told you owe taxes for a year you didn’t work.

What to do if you’ve been affected by tax identity theft

Acting quickly can help limit financial damage and restore your identity. If you suspect tax identity theft:

• Contact the IRS: File IRS Form 14039 (Identity Theft Affidavit).
• Look for any IRS documentation: Respond immediately to any IRS notices.
• Contact a credit bureau: Place a fraud alert with one of the three major credit bureaus.
• Monitor your credit reports: Look for unusual or suspicious activity.
• Get cybersecurity: Consider identity theft protection for ongoing monitoring.

Help protect yourself from identity theft with LifeLock

If you’re focused on how to prevent tax identity theft, having added visibility into your identity can provide another layer of reassurance. Tax season may be once a year, but identity threats don’t follow a calendar.

LifeLock can help monitor your personal information and alert you to potential threats. Take steps to help safeguard your identity today.

FAQs

What is tax identity theft?

It’s a form of identity theft where someone uses your Social Security number to file a fraudulent tax return and claim your refund.

How can tax identity theft occur?

Tax identity theft can happen through data breaches, phishing scams, stolen mail, fake tax preparers, or exposed Social Security numbers. Cybercriminals use your PII to pose as you and file a tax return in your name. 

What do I do if someone filed taxes in my name?

File IRS Form 14039, follow IRS instructions, and monitor your credit and financial accounts closely.

How can tax identity theft be prevented?

File early, get an IRS IP PIN, secure your online accounts, protect your SSN, and monitor for suspicious activity year-round.