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Published on January 24, 2023 | LPL Financial
Identity theft is one of the fastest-growing crimes in the United States. According to Consumer Affairs, in a 2022 study, each year, seven to ten percent of the U.S. population are victims of identity fraud, and 21 percent of those are repeat victimsi. Identity theft and identity fraud refer to crimes in which someone wrongfully obtains and uses another person’s personal information, typically for economic gainii. Criminals may, for example, use your identity to open or empty bank accounts, obtain credit cards, or take out loans. In addition to fraud directly concerning your finances, thieves can use your information to commit crimes that may affect your taxes.
With your identifying information, an undocumented worker or another individual may use your Social Security number on job applications and employment paperwork. The employer would then report the thief’s W-2 wages earned to the IRS using your information. As a result, when you file your tax return, it will appear that you did not report all of your income to the IRS.
An identity thief may also file a tax return using your name and Social Security number to obtain a refund. When you later file your return, the IRS might believe that you already filed and received a refund; therefore, the return you submitted would be considered a second copy or duplicate.
Before you become a victim of identity theft, consider these steps to help protect yourself.
If you receive a notice from the IRS that leads you to believe that your personal information has been used to commit tax fraud, contact the IRS by phone or in writing as directed in the notice. Possible triggers indicating you may have been the victim of identity theft include statements that you received wages from an employer unknown to you or that more than one tax return was filed in your name. IRS tax examiners can work with you and other agencies, such as the Social Security Administration, to resolve these discrepancies. It is important to note that the IRS will not initiate a request by e-mail for taxpayer information in this or any other situation. If you do receive such a request, it may be an attempt by identity thieves to obtain your tax information.
In addition to other precautions you may take to protect your identity from thieves, the IRS recommends that you be extremely careful when choosing someone to assist you with tax preparation. Because this person will have access to your financial records, be sure to research their credentials and experience. Avoid preparers who guarantee results, base fees on a percentage of the refund, or claim they obtain larger refunds than other preparers.
Identity theft can be a financially and emotionally devastating ordeal; for more information about identity theft and what to do if you become a victim, visit the FTC’s website, www.ftc.gov.
All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.
This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
This article was prepared by Liberty Publishing, Inc.
LPL Tracking # 1-05319560