With tax season in full swing, it’s crucial to be aware of fraud and scams that can cost you more than your tax return.
Over the past two years, there have been over eight million suspicious activity reports related to identity theft and income tax filing. This year will be no different. Scammers are only doubling down on their efforts to break into your accounts — and are getting more sophisticated in the ways they do it.
Tax scams are increasing at the same time fraud in general is on the rise. The only way to protect yourself from these scams is to be aware of what is out there and increase security around your finances.
According to the Federal Trade Commission, fraud cost consumers $10 billion in 2023, and that includes tax fraud. When it comes to tax filings, 92% of tax returns were filed electronically last year, making those returns even more vulnerable to hackers and AI.
Here are three ways scammers are trying to hack your accounts and how you can protect yourself:
1. If possible, file your taxes early — before someone tries to do it for you
If you aren’t aware of this scam, tax filing fraud is when scammers will file a return in your name and subsequently steal your refund. One way to steer clear of this scam is to file early and get your tax return into the IRS so no one can beat you to it. In addition to filing early, you can also get an identity protection PIN, which prevents someone else from filing a tax return using your Social Security number.
If you have already been a victim of tax-related theft, the IRS should be sending you a new IP PIN every year. However, the IRS has now opened up the process, allowing anyone with a Social Security number or individual taxpayer identification number who can verify their identity to enroll in the program by filling out an application online.
2. Be vigilant about scam phone calls, emails, and texts
This annoying way for a scammer to try to reach out and rob you has only increased over the years but gets taken up a notch during tax season. Phone scammers pose as IRS agents calling to tell you that you owe the government money and that payment needs to be made immediately or a warrant will be issued for your arrest.
As a personal anecdote: I once received such a call, and the kicker was not only was I told that I needed to make an immediate payment, but I could not end the call or put them on hold. As a financial expert who practices what I preach, I knew I didn’t owe the IRS money, but the caller was so insistent and talking so quickly and threateningly, saying a warrant was waiting for just one signature and the sheriff would be at my door. Going with my gut, I hung up the phone — but I will admit to looking out the window a few times throughout the day after that phone call.
This same scam can show up through emails or text with a link for you to click on. It may even look legit, but remember: the IRS sends correspondence through the mail, not text alerts.
3. Unclaimed refund scam
This scam can show up in your mailbox or email inbox. Either way, the official-looking letter from the “IRS” tells you that you are entitled to a refund — all you have to do to get it is send a copy of your driver’s license and confirm your Social Security number. Just receiving a request for all of this personal and financial information should be cause for concern, but when it comes to a tax refund or “found money,” sometimes we don’t see as clearly as we should.
This fraudulent letter, often titled “regarding your tax refund,” targets taxpayers in hopes of stealing personal information that can be used for identity theft or tax fraud. The IRS warns that although it may look official, upon closer inspection, there will be signs that should raise concerns; for example, incorrect contact information, strange fonts, improper paragraph alignment and even misspellings.
Remember, the IRS will not initiate contact with you by email, text message or social media to request personal or financial information. If you think you may have encountered a scam, you can forward email messages or phone numbers that claim to be from the IRS to phishing@irs.gov — but do not open the attachments or click on any links in those emails! You can also report IRS scams online or by calling the Treasury Inspector General for Tax Administration, or TIGTA, at 1-800-366-4484.
Jennifer Streaks is Senior Personal Finance Reporter and spokesperson at Business Insider and a financial contributor at The Grio. A nationally recognized expert on money and affordable lifestyle living, Jennifer is an established financial columnist who has been featured on CNBC, Forbes, ABC, MSNBC, CBS, and more.
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The post How to protect yourself from scams and fraud this tax season appeared first on TheGrio.
