Taxpayers are typically focused on Tax Day, but by filing early, you can help reduce the risk of your refund being stolen. There’s still time before the April 17 cutoff, so get started now before it’s too late to file your taxes early.
There’s a good reason tax advisors advocate filing early. That’s because only one return is accepted per Social Security number (SSN) per year. If you file before a hacker who’s stolen your SSN, the hacker’s attempt will be disallowed. If a thief beats you to the finish line, your legitimate return gets rejected.
Where Hackers Get Their Data
In 2017, hackers often targeted W-2s—the annual record of wages and taxes sent to workers. School districts were one popular target nationwide, but both large and small companies were also in the crosshairs. Tamara Powell, acting director of the IRS Return Integrity Compliance Services, last year told attendees at an Orlando conference that 870 such attacks were reported to the IRS during the first four months of 2017. That figure is significantly larger than the 100 attempts documented the previous year.
One common scam begins with a phishing email claiming to be from the organization’s CEO or another top executive requesting a copy of W-2s for all staff members. Many Human Resources workers have bitten the hook and forked over the forms, which include names, addresses, wages, and Social Security numbers.
While the IRS can now flag files whenever a company’s W-2s are stolen in this manner, it is important to know that hackers don’t even need a W-2 to commit fraud. Instead, they invent an income and the amount of taxes withheld. All that’s required is an SSN and a matching name. That’s why thieves can often file faster than legitimate taxpayers; they don’t need to wait until the real forms arrive in the mail.
Don’t File Too Early
The IRS also supports filing as soon as possible to avoid fraud. However, the agency warns not to jump the gun before all your W-2s, 1099 forms, and other documents arrive.
Filing an incomplete return could create the need for an amended return. The IRS cautions that a premature filing could also result in interest, penalties, an IRS notice, or even an audit. By now you should have all your forms, unless you are involved in a partnership or other type of organization requiring Schedule K-1, so file as soon as you can.
Victims of 2017’s numerous natural disasters will also face unusual challenges this tax season that might impact how quickly they can file. Recent IRS guidance is available that spells out a safe way to determine casualty losses, so taxpayers hit by one of the year’s damaging hurricanes or wildfires won’t have to guess what the agency expects. The agency also created a special web page to guide disaster victims.
There’s Help if You Become a Victim
If you become an identity theft victim, you will want to file Form 14039, the IRS’s Identity Theft Affidavit, as soon as possible. IRS theft investigations can take months, but you will eventually get your refund check.