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Tips to Avoiding Identity Theft on Your Taxes and Finances

One’s personal information is an important part of who they are and how businesses and the government identify them. It not only confirms who they are but also helps determine benefits, affects one’s taxes, and provides access to financial details such as R&D tax credits. Unfortunately, this makes personal information an appealing target for criminals. Because this is a serious crime with potentially devastating repercussions, everyone should understand what they can do to protect themselves.

What Is Identity Theft?

Identity theft is a crime in which someone steals and uses another person’s personal information for their own gain. This information may include the person’s name, date of birth, Social Security number, credit card number(s), and insurance information. Once equipped with this information, criminals may use it to make expensive purchases, receive health care, and even file fraudulent tax returns for a refund.

A person who is a victim of identity theft can end up responsible for credit card charges and medical charges or implicated in crimes that they did not commit. People who are victims of identity theft should report it to the authorities as quickly as possible, contact the credit card company and their bank, and notify the major credit bureaus.

Keep Your Personal Information Safe Online

From shopping to filing taxes, people use their computers or smartphones for almost everything that they do. Although it’s convenient for the user, this activity makes it easy for thieves to find and steal personal information. Fortunately, there are simple things that people can do to keep their information safe online.

Using strong passwords prevents others from gaining access to computers and online accounts. To prevent people from using them without permission, one’s computers, phones, and tablets should all have password protection. This is extremely important for phones and other mobile devices that one may accidentally misplace in a public space. When creating passwords, they should each be unique and complex, using a combination of upper and lowercase letters, numbers, and symbols.

Free Wi-Fi is another vulnerability that can leave one’s personal information visible to scammers and other criminal elements. Ideally, one should avoid using free Wi-Fi, as it is typically not secure; use a personal or mobile hot spot instead if available. If using public Wi-Fi is necessary, avoid activities such as banking or shopping, and always sign out completely when done. Even at home, steps like having strong password protection are a necessity to prevent strangers from logging on without permission.

While online, people must be wary of duplicate or false websites and only enter credit information on known, secure sites. Phishing and other email scams are also a means for criminals to collect personal information. To avoid these types of traps, use caution when opening unknown emails or when responding to emails that sound suspicious or alarming. This is true even if an email claims to come from a trusted site. Another important key to protecting one’s information is to also never click “click here” prompts in unknown or suspicious emails, as they are often a tool used by scammers.

Minimizing Your Risks

Regardless of what steps a person takes, they’ll never protect themselves 100% against identity theft. They can, however, significantly minimize their risk of becoming a victim. Besides keeping their personal information safe online, people should use caution in their daily activities. To start, it’s important to understand some of the common methods used to steal information. These methods include shoulder surfing, stealing from mailboxes, skimming credit cards, and even digging through trash bins.

Using a lockable mailbox locked is an important yet simple security measure that can prevent a thief from taking banking and tax information and other mail that contains sensitive information. One can reduce the amount of personal information that comes in the mail by requesting electronic bills and having anything with personal information sent electronically to a secure email address. Another important step is to shred mail before throwing it away.

There are many people who carry their Social Security cards on them, a practice that puts their card in jeopardy if they their wallet or purse is lost or stolen. This is true for credit cards as well. Ideally, people should only carry what they’ll need for the day to avoid someone having access to all of their banking and credit accounts.

Both store checkouts and ATMs are places where people steal credit card information. When using a card to make a purchase at a restaurant or any type of store, people should keep a vigilant eye on their card. Some people may have access to devices that allow them to “skim” credit card numbers for later use.

When using an ATM, one should always know if someone is standing too close and potentially looking over their shoulder. Whether the ATM is inside or outdoors, there are people who may attempt to look over one’s shoulder or even try to grab their card. And one should never leave the receipt behind after completing a transaction.

The major credit bureaus can also help minimize the risk of identity theft. By running a free annual report from all three bureaus, a person can discover any abnormal activities like new accounts that shouldn’t exist. Even if there are no problems, placing a security freeze on one’s credit files can prevent anyone from creating new and fraudulent credit accounts.

Home robberies can happen, and if they do, sensitive information should not be easy to find. Storing sensitive information such as Social Security cards, birth certificates, and tax returns in a secured box is one way to protect this type of information. Another option is to store these items away from home in a safe deposit box at a bank.

Additional Reading on Identity Theft and Taxes

This page was last updated by Steven Jefferies