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Protecting Your Tax Identity Doesn’t Have to Be Taxing

Published on January 15, 2025 | 3 min read | Webster Bank

When you think of identity theft, you may think of unauthorized credit card payments or new lines of credit. However, tax identity theft is one of the most common types of identity theft — and it’s also the most common fraud attempt during tax filing season.1

If your identity is stolen for tax purposes, you can find yourself waging battle on two fronts: against the identity thief and the IRS. Fortunately, protecting your tax identity doesn’t have to be difficult. Below, we explain a couple of ways you can theft-proof your ID.

Identity Protection PIN

The IRS can issue an identity protection pin (“IP PIN”) that will prevent anyone else from filing a tax return using either your Social Security number or your individual taxpayer identification number (“TIN”).

Only you and the IRS will know your IP PIN, and the identity verification process required to qualify for an IP PIN helps prevent fraud. Your IP PIN is valid for just one calendar year, and the IRS will generate a new PIN each year for as long as you’d like one.

To get an IP PIN, you can either confirm your identity through an online process or file an application in person at a local IRS office.2 Keep this PIN in a secure place, since entering the wrong IP PIN on your electronic or paper tax return will cause it to be rejected. Also remember that the IRS will never ask you for your IP PIN, so don’t reveal this PIN to anyone but your tax professional.

Identity Protection Software

Along with the IP PIN issued by the IRS, there are several different types of identity protection software that can prevent your SSN from being used anywhere without your consent. These programs will ensure you receive notifications whenever someone is trying to use your personal information for their own gain.

These programs aren’t specifically for protecting your tax identity, however; they will also lock your credit at credit bureaus to prevent others from taking out loans or lines of credit using your personal information. This means that whenever you’d like to apply for a new credit card or refinance your mortgage, you’ll need to have this credit lock temporarily lifted and then re-applied.

Because of the above factors, if you’d prefer to protect only your tax identity—not your total identity—an IP PIN may be the way to go.

 

Important Disclosures:

Content in this material is for educational and general information only and not intended to provide specific advice or recommendations for any individual.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by WriterAccess.

LPL Tracking # 1-05345916.

Footnotes

1  “Identity Theft Reports by State, 20022,” IPX 1031, https://www.ipx1031.com/id-theft-by-state-2022/

2 “Get an Identity Protection PIN,”  Internal Revenue Service, https://www.irs.gov/identity-theft-fraud-scams/get-an-identity-protection-pin

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