What is tax identity theft and how does it occur?

In the 2025 tax filing season alone, The Internal Revenue Service (IRS) flagged 2.1 million returns for potential identity theft. And, while some of those cases may be the result of oversensitive filters erring on the side of caution, many are likely to be real cases of tax identity theft.

Unpicking the web of identity theft and its fallout isn’t a quick job. In fact, refund delays for theft victims in 2025 took around 20 months to resolve on average. And, in the meantime, you’re unlikely to receive a tax refund that you might be owed, leaving you out of pocket when you least expected it.

Learn more about how tax identity theft occurs so you understand what you can do to protect against it, and discover the key steps to take if someone does file in your name.

What is tax identity theft?

Tax identity theft is when someone uses your personal information to file a fraudulent tax return in your name. Typically, they do this to steal your tax refund or claim taxes withheld while they worked under your stolen identity.

Another less common form of tax identity theft involves the thief fraudulently claiming your child or another dependent on their tax return to steal the tax benefit. But, regardless of the specifics, you probably won’t realize you’re a victim of tax identity theft until you try to file your tax return and it’s rejected automatically.

How tax identity theft typically happens

A typical case of tax identity theft involves a fraudster stealing your personal information and filing a fake return in your name to claim your refund. They’ll aim to file as early as possible in the tax season to get there before you get a chance.

All they need to get started is your SSN and name. However, any other data they have access to, like your birth date, address, W-2 details, or prior-year tax information, can make the fraudulent filing look more legitimate. They steal this information through phishing attacks, data breaches, or mail theft.

Here’s a summary of how a tax identity theft incident might go:

•  Your sensitive information is stolen: Identity thieves need to get access to sensitive information required in a tax return, like your SSN. To get it, they might steal your mail, exploit security flaws in payroll software, trick you with social engineering tactics, leverage a data breach, or buy data on dark web marketplaces.
• A fraudulent tax return is filed in your name: Using your SSN and other personal information, the identity thief will file a tax return in your name early on in the tax season, before you get a chance to do your own. They’ll make up fake income and deductions to maximize the return.
• Your return is directed to the fraudster: The identity thief enters their own bank account information for the tax return to be deposited in, giving them access to cash that should be yours.
• You can’t file your own return: When you finally get around to submitting your tax return, you’ll get a message from the IRS system claiming that one has already been filed under your name. At this point, you’ll need to prove your identity to the IRS before the issue can be investigated.

Warning signs of tax identity theft

Tax identity theft often goes unnoticed until you try to file and receive an auto-rejection, or you get mail from the IRS about unreported income, account changes, or a previously filed return. However, there are some other potential warning signs to watch out for, including:

• Unfamiliar income: If you receive a W-2 or 1099 from an employer you don’t recognize, someone may have used your identity to apply for and get approved for a job, creating income records the IRS now associates with you.
• Missing mail: Ahead of tax season, be vigilant for any missing mail, particularly if you’re expecting sensitive documents like W-2s, 1099s, bank statements, or insurance notices. If mail you expect doesn’t arrive, it may have been stolen for tax identity theft.
• Delayed refund: The IRS’ Where’s My Refund? tool may show unusual delays or status changes if the IRS flags your return for identity verification after receiving a fraudulent filing.
• Unexplained credit activity: Unauthorized accounts or credit inquiries may appear on your credit report if your stolen identity has been used in credit fraud. This means you’re also at increased risk of tax identity theft.

An identity theft protection service can help you monitor for common signs that your sensitive data is being misused, with credit monitoring, financial account alerts, identity alerts, and more. Plus, if you do fall victim to identity theft, you’ll get expert restoration support helping guide you through the recovery process.

How to protect against tax identity theft

There’s no foolproof way to prevent tax identity theft, but you can help protect yourself by taking proactive measures such as filing early, securely storing documents containing sensitive information, and limiting access to your accounts and SSN.

Here’s a summary of some of the best proactive steps you can take to defend against tax identity theft:

• File early: Submit your return as soon as possible after your tax documents are ready (employers must send them out by Jan. 31st). This shortens the window for identity thieves to file in your name.
• Maximize account security: Lock down the accounts most likely to be used in tax fraud — like tax filing software, IRS and Social Security accounts, and bank accounts. Set strong passwords, store them in a secure password manager, and enable two-factor authentication to help prevent account takeovers that could expose tax documents or redirect refunds.
• Monitor your credit: An identity thief who plans to commit tax fraud using your information may already be using your SSN and other data to get credit in your name. Monitoring your credit manually or with an identity theft protection service can help you catch signs of fraud.
• Shred sensitive documents correctly: Use a cross-cut or micro-cut shredder for old tax returns, W-2s, 1099s, bank statements, and insurance paperwork. Determined identity thieves can often reconstruct documents blacked out with a marker or torn by hand.
• Go paperless: Opt into electronic delivery for tax documents, bank statements, tax refunds, and government notices to reduce the risk of mail theft and time spent shredding. For extra security, store sensitive PDFs in password-protected folders or digital vaults.
• Keep your SSN private: Insurance, utility and healthcare providers, employers, and financial services may need your SSN to verify your identity. Even so, you should always verify why they need it and how they’ll store it. If you deem it necessary, provide your SSN through a secure portal or in person, never via email or a phone call.
• Know how and why the IRS would get in contact: The IRS usually initiates contact with a mailed letter, not texts or emails. In some cases, the IRS may call after sending an official letter, but they won’t demand immediate payment, threaten arrest, or ask for payment by gift cards, wire transfer, or cryptocurrency.
• Get an IP PIN: An IRS Identity Protection PIN is a six-digit code that must be entered when filing a tax return connected to your SSN. Setting one up for your SSN makes it much less likely that a fraudster can file in your name, and you don’t need to have experienced identity theft in the past to do so.

What to do if someone files taxes in your name before you do

If someone files taxes in your name, you’re still legally required to file your legitimate tax return. However, you’ll also need to confirm or report the fraud and prove your identity. While the matter is under investigation, the IRS may delay processing your return or issuing a refund until your identity is verified.

Next steps play out in one of two ways, depending on whether the IRS instructs you to verify your identity or report tax-related identity theft:

After the IRS resolves your case (this may take longer if you flag the fraud before they do), they’ll add an identity theft indicator to your account and enroll you in the IP PIN program to help block fraudulent returns in the future.

Additionally, you should consider notifying the police and the Federal Trade Commission (FTC) to create an official paper trail. This can help stop further misuse of your information, give you identity restoration support, and help you prove your case in an identity theft insurance claim.

Other ways criminals can use stolen tax information

A lot of times, the information criminals use to steal your tax refund isn’t used just once. Outside of committing tax fraud, thieves may use key data like your SSN to:

• Apply for jobs: Criminals can use your SSN to apply for jobs in your name, often to earn a paycheck or gain access to benefits like health insurance.
• Claim government or insurance benefits: Thieves may use your SSN to receive government or medical benefits.
• Take out loans and credit cards: Using your SSN and other personal details, fraudsters can open credit accounts or take out loans in your name.
• Open accounts: Criminals may open utility accounts, bank accounts, mobile phone plans, or financial subscription services in your name.
• Create synthetic identities: By pairing your SSN with fake names, addresses, or birth dates, criminals create new identities that don’t immediately trigger fraud alerts tied to your real credit profile. This makes it easier to build credit, open multiple accounts, and carry out long-term fraud.

If your information was exposed on the dark web, many people may attempt to use it for these purposes at the same time.

Monitor for unauthorized SSN usage this tax season

Recovering from tax identity theft can be a long, complicated process. But LifeLock helps protect your sensitive data to help reduce the risk that you’re targeted and monitor for early signs of identity fraud. Plus, if your identity is stolen, a U.S.-based restoration expert will be on hand to guide you through the recovery process and you’ll get reimbursement coverage to help protect your finances.

FAQs

How can I check if my SSN is compromised?

Signs that your SSN was compromised include errors or suspicious accounts on your credit report, transactions you don’t recognize on your bank or credit card statements, strange entries on your Social Security Administration (SSA) account, and unfamiliar IRS tax transcripts. If you notice suspicious activity across any of these accounts, someone may be using your SSN.

How do I report tax identity theft to the IRS?

You can report tax identity theft by filing IRS Form 14039, the Identity Theft Affidavit. Submit the affidavit online or mail a copy when you turn in your revised paper tax return.

How common is tax identity theft?

Tax identity theft is more common than you might think. In 2025, the IRS flagged around 2.1 million returns for possible identity fraud, according to the National Taxpayer Advocate’s mid-year report to Congress.