Tax-related identity theft results when someone uses your Social Security number to file a tax return and obtain bogus refunds. When a return is filed under your name, the processing of your return is delayed, even though yours is legitimate, and if you are due a refund, the refund is greatly postponed. Understand what you can do to prevent being a victim of tax-related identity theft, and what to do if you should become a victim.
1. Preventing identity theft
While there’s no absolute protection against identity theft, there are measure you can take to minimize the changes that you’ll be victimized.
2. Recognizing potential identity theft
There are some clear indications that you’ve become the victim of tax identity theft:
If you think or you know you’ve been the victim of identity theft, even if your tax account has not been compromised, you should take action. Report your concerns to the IRS. You may be issued a special tax identification number—called an Identity Protection Personal Identification Number (IP PIN)—which is a special six-digit number that you use for the tax year for which the IP PIN is designated. An IP PIN is used if any of the following apply to you:
3. What to do if you are victimized
If you are a victim of tax-related identity theft, you must take action—with the IRS and with others.
With the IRS:
With others:
Conclusion
Last year, the IRS’s computer filters detected about 3 million suspicious returns, flagging them for further review. Many of these suspicious returns related to identity theft. Almost 2,000 people have been convicted of tax refund fraud related to identity theft. You can’t be complacent and ignore the risk; the numbers are just too big. Be proactive in protecting yourself, and take immediate action if you are victimized.
Items directly reducing income. Personal deductions such as for mortgage interest, state and local taxes, and charitable contributions are allowed only if deductions are itemized on Schedule A, but deductions such as for alimony, capital losses, moving expenses to a new job location, business losses, student loan interest, and IRA and Keogh deductions are deducted from gross income even if itemized deductions are not claimed.