Millions of Americans become the target of identity theft each year. Identity theft often involves opening new accounts using your personal information or using your health insurance, but it can also involve your federal or state taxes.
Tax-Return Identity Theft
According to the IRS, tax-related identity theft is when someone other than you uses your social security number to file taxes and claim your tax refund. The IRS joined with state tax administrators, tax-preparation firms, and software companies to form the Security Summit in 2018. The Security Summit helps combat tax-related identity theft by detecting potentially fraudulent tax returns. The IRS will contact you if they identify your tax return as suspicious. You could also discover a tax-related identity theft when you try to file your taxes and find that a return has already been filed using your social security number.
If you become the target of tax-return identity theft, you may wonder how to move forward.
How are taxes filed after identity theft occurs?
After an identity theft of your tax information or social security number, you should fill out the IRS Identity Theft Affidavit form and mail it into the IRS based on their instructions. If tax-related identity theft blocks you from eFiling your taxes, then you must mail in a paper verison of your tax return with the filled-out Identity Theft Affidavit attached.
The IRS should reach out within 30 days of receiving your Identity Theft Affidavit. If you do not hear from them (typically by letter), then make sure to reach out by phone for special assistance at 1-800-908-4490. The IRS wants to help you resolve any tax-related issues caused by identity theft, and they have teams trained to do just that.
How long does it take to get a tax refund after identity theft occurs?
When your IRS return is flagged for identity theft, it can take anywhere between 3 and 12 months to receive your tax refund. The flag on your account will be in place indefinitely and will ensure that tax specialists give your tax returns extra scrutiny.
What to do if your tax refund is delayed or flagged due to identity theft?
If your tax return is delayed or flagged due to identity theft, the IRS will contact you by mail with letters and forms to verify information. The IRS flags your account when they or you find suspicious information on your return or when you fill out the Identity Theft Affidavit. The flag will remain on your tax account indefinitely. This flag could lead to a delay in receiving your tax refund, because the IRS will also check your previous tax returns for signs of identity theft.
Preventing Tax-Return Identity Theft
Identity theft protection can help you prevent tax-return identity theft. Popular service providers include Identity Guard, LifeLock, and IdentityForce.
For more than 20 years, Identity Guard has been an industry leader in identity theft protection. Identity Guard has protected more than 47 million people with their award-winning services, designed to protect your financial data, your personal information, and even your computer. Identity Guard partnered with IBM Watson for their data-mining capabilities to better detect if your information appears on the dark web or to monitor your credit for the first signs of suspicious activity.
Identity Guard offers three packages: Value, Total, and Premier. The Value package is $8.99 per month and includes dark web monitoring, an anti-phishing app, safe browsing tools, and risk management reports. The Total package is $19.99 per month and provides tax-specific protection. It includes everything in the Value package plus monitoring of all three credit reports and of your address, a monthly credit score, and alerts about your tax refund. The Premier package is $24.99 per month. It includes everything in the Total package plus your credit report and a social insight report. You can save 17% by signing up for an annual subscription.
LifeLock is a 14-year-old company with a reputation for excellence and is now the same company as Norton, the security technology giant. LifeLock provides 4.4 million customers with identity theft protection, which allows them to detect suspicious activity and to make proactive decisions about their financial and personal security. LifeLock detects threats that you won't find on your own, regardless of how rigorous you monitor your online accounts. LifeLock scours the internet for activity on your credit file, for unauthorized address changes, for online and payday loans, and for your private information on the dark web. LifeLock also protects you against identity theft with their device protection measures from Norton.
LifeLock offers three packages: Select, Advantage, and Ultimate Plus. The Select package is $9.99 per month for the first year. It includes a reimbursement of up to $25,000 in stolen funds and alerts for your social security number and credit. The Advantage package is $19.99 per month for the first year. It includes reimbursement of up to $100,000 in stolen funds and alerts based on your social security number, your credit report, financial activity, and criminal reports. The Ultimate Plus package is $29.99 per month for the first month. It includes everything in the Advantage package plus annual credit reports and scores, investment alerts for your 401(k), and a reimbursement of up to $1 million in stolen funds.
IdentityForce has more than 40 years of experience protecting their millions of customers' privacy. IdentityForce is a trusted, award-winning brand in proactive protection for your credit, privacy, and identity. They pride themselves on remaining innovative in an ever-changing world, which is why IdentityForce is constantly updating their technology to remain state of the art.
IdentityForce offers two packages: UltraSecure and UltraSecure+Credit. The UltraSecure package is $17.95 with a 14-day free trial. This package includes monitoring, alert, control, and recovery tools, including identity theft insurance of $1 million. The UltraSecure+Credit is $23.95 per month. This package includes everything in the UltraSecure package plus credit report monitoring from all three credit bureaus, credit scores, a credit-score simulator, and a credit-score tracker.