Identity theft is a growing concern, impacting 14.4 million U.S. Consumers in 2019.1 Armed with your Social Security number, a criminal can use that information to commit tax- and other financial-related crimes in your name.
There are a number of common ways that identity thieves can obtain your Social Security number:
- Stealing your mail, purse, or wallet.
- Stealing data from an unsecured website that you visit.
- Stealing personal information from records left at work or from your home.
- Going through your trash and finding personal data about you.
- Executing a phishing scam via email, soliciting your personal information.
Tax-related identity theft is when a criminal uses your Social Security to file a fraudulent tax return in your name, claiming a tax refund. The IRS has become vigilant in guarding against this practice; while there were 597,000 confirmed identity theft-related tax returns in 2017, this was down sharply from 883,000 in the prior year.2 The drop can be attributed to an aggressive education program, whereby the IRS is educating the public about the need to protect personal data. Their efforts involve emphasizing a number of important steps people can take to safeguard their information.
Be Vigilant. Always.
- Always be on the lookout for would-be identity thieves, whether you’re at work or home.
- Protect your Social Security card and other personal documents that include the number in a safe place.
- Do not carry your Social Security card unless absolutely necessary.
- Don’t go phishing. Email scams are proliferating, with cyber criminals posing as financial institutions and even the IRS to solicit your personal information. These emails typically direct you to a fraudulent website that asks you to input your private information, such as bank account numbers, passwords and your Social Security number.
- Protect your computer with malware protection and firewalls. Make sure the software is always active and updates automatically. Encrypt your sensitive documents — tax records, for instance — with a strong password.
- Change your passwords regularly and choose unique ones for individual accounts.
- Be alert for phone calls where the caller poses as the IRS. The IRS will never call you and demand your personal details.
- When shopping online, visit reputable merchants and those with whom you’ve established an account history. If it’s the first time working with a particular merchant — especially one that is not especially well known — be sure to verify that their website address begins with “https:,” this provides additional security between your web browser and the merchant.
- Google, Bing, and Yahoo search your name to discover what is available about you online. This could help you identity potential thefts of your identity.
What to Do If Your Identity Has Been Stolen
If your identity has been stolen and you’ve fallen victim to a tax-related crime (i.e., you cannot file a tax return because someone has already filed it using your Social Security number), there are important steps that you should take:
- Complete IRS Form 14039 Identity Theft Affidavit and submit it with your tax return, which you should send via regular mail.
- File a complaint with the Federal Trade Commission (FTC).
- Contact at least one of the major credit reporting agencies — Experian, Equifax, or Transunion — directing them to place a fraud alert on your account.
If the IRS confirms that you have been victim to a tax-related identity theft, it may issue you a unique PIN each year for you to use when filing your taxes electronically.
For more information on tax-related identity theft, visit the IRS website.
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal.
This material was prepared by LPL Financial, LLC.