With Tax Day approaching, using an online system can seem like the quickest and easiest way to file your return. But as a growing number of hackers seek to cash in by filing fraudulent tax returns digitally, tax season can seem even more stressful.
Tax returns are ripe for identity theft: In 2016, more than 42,000 fraudulent tax returns were filed, and more than $227 million was claimed in fraudulent refunds, according to a report from the U.S. Treasury Department’s Inspector General. In addition, the Internal Revenue Service (IRS) prevented the payment of $180 million in refunds claimed on fraudulent returns.
Many workplaces now utilize digital W-2 filing systems, granting employees immediate access to their documents. And filing a return online is the quickest way to get a refund. These online systems simplify the tax filing process, but can also open up potential avenues for fraud.
It’s possible to use online systems and keep your data safe during tax season, but safety requires awareness and precautions. These four steps can help protect your digital information:
Use secure sites. When storing tax documents online, make sure the site is secure and password-protected. And don’t use the same password you use on every other site; you should protect your personal tax information with a complex, unique log-in.
Update your software. Most tax preparation software programs integrate with Microsoft Office so you can convert documents to Excel or Word. If your tax preparation software has not been updated, it may be vulnerable to a virus and once you access a spreadsheet or other program through that software, your information could be compromised, according to Jason Glassberg, co-founder of Casaba Security, a cybersecurity firm based in Redmond, Wash. The latest versions of tax preparation software can generally recognize such viruses, so it’s important to be diligent about updating your programs.
Don’t trust everyone. Some fraudsters may be bold enough to call or email you and ask for information, posing as a representative of the IRS or another organization. Don’t fall for it: Never give out information to unknown people—even if they say they are with the IRS. The IRS or a reputable bank will never ask for personal information over the telephone or email. In most cases, the IRS will send a letter by mail if they need information from you, and there will be multiple levels of authentication.
Protect your network access. If you use a wireless internet connection at home, make sure you have a strong password to access the network, as well as a properly configured firewall on your home computer. And when using a public Wi-Fi connection, don’t check bank accounts or access other personal information—public networks are, by nature, not secure. Keep in mind that accessing personal or financial information on your smartphone or tablet via a public network leaves you just as vulnerable as if you were using a laptop.
If you think someone has stolen your identity or filed a fraudulent tax return in your name, report it immediately. Respond to any IRS notice you receive by calling the number provided, and file an Identity Theft Affidavit with the IRS. Even if you are still waiting for your case to be completed, continue to pay your taxes and file your own tax return, even if you must do so by paper.
While online filing can simplify the tax-paying process, taking a few simple precautions can help you protect your data and your digital identity.