It may seem impossible to be able to shield your personal information, but there are some simple ways in which you do have the ability to protect yourself from identity theft. These simple identity theft protection tips will help prevent tax-related identity theft while also protecting your Social Security Number (SSN), checkbook and credit card accounts.
Identity Theft Protection: Tips to Safeguard Tax information, SSN, Credit and Debit Cards and Checkbooks
Protect Your Tax Information
- Secure Your SSN – Do not carry with you your social security card or number in a purse or wallet. Memorize your number and leave the card in a secure place at home or inside of a safe deposit box.
- Don’t Keep Your Tax Information Stored on Your Computer – All of your sensitive tax information, such as worksheets, W-2s, 1099s, and 1040s, should be stored on a password protected or encrypted external drive or memory stick. This should then be locked in a secure place like a safe or safe deposit box. If you do store the information on your computer, make sure that the drive is encrypted.
- Use Strong Usernames and Passwords – For all of your accounts, especially those dealing with your financial affairs, your passwords should always include upper and lowercase letters as well as symbols like *, #, or !.
- Choose Your Tax Preparer Wisely – There have been cases where fraud rings have fronted as tax preparation companies as a way to steal your personal information. Ask for references before handing over your personal information to any tax preparation company or firm.
- Keep Track of Your Earnings – Each year you are issued a social security statement that identifies all of the income earned under your SSN for the year. Carefully do the math to make sure that the numbers add up to what your actual earnings were.
- Watch For Tax Related Mail –Stalk your mailbox, keeping an eye out for your W-2s, 1099s, and any other tax related forms. If your forms arrive late or appear to have been tampered with, contact the provider right away and ask how and when they were mailed to you.
- Use Certified Mail – If you are still using the US Postal Service to send in your tax returns, splurge on certified mail so that you are able to confirm that it arrived in the correct amount of time. Please make sure to check the IRS tax form mailing address.
- Go Electronic – You can opt to have your tax refund direct deposited in order to avoid a lost or stolen refund check.
Keeping Your Tax Information Safe Online
- Do Not Respond to Emails From the IRS – The IRS will never communicate with you or make a request for your personal information such as SSN or date of birth using an unsolicited email. Never open or respond to an email claiming to be from the IRS, rather forward them to [email protected].
- Do Not Follow Links – Always type in an URL rather than clicking on a link attached in an email. You should also avoid downloading attachments or responding to a banner ad for tax services from an unknown or untrusted source. Be on guard for scams that attempt to lure you in with the promise of a larger or faster tax refund, knowing that the average time for a refund will not change no matter who files it.
- Watch Out for Cloned Websites – A cloned, or imposter, website will contain typos, grammatical errors and an unprofessional appearance. You may also note odd error messages, an unexpected page layout or other strange site behavior. Only visit sites of reputable tax preparation firms and ensure that there is a padlock to the left of the address bar, indicating that the connection is secure.
Keeping Your Tax Information Safe at Home
- Know That You Can’t Be Too Careful – All of your personal and tax sensitive information should be kept stored on an external hard drive or disk, protected with a password or encryption. You should then store that drive or disk in a secure location, such as a home personal safe or safe deposit box. All information that is stored on your personal computer hard drive should be encrypted.
- Clear Out Old Devices – Destroy any old computers, drives, printers or fax machines that may have past tax information stored on them. If unable to, invest in a trusted wiping application.
- Hack Proof Your Passwords – Strong usernames and passwords should always be used, especially when dealing with sensitive financial information. Be creative and use upper and lowercase letters interspersed with characters like &, %, and ?.
Keeping Your Tax Information Safe When You Use a Tax Preparer or Accountant
- Choose a Trusted Preparer – Don’t be fooled by fraud rings that offer to prepare your taxes or review the return for any inaccuracies. Fraudulent tax preparers will steal your personal information and have your refund redirected to them.
- Be Wary – Take extra care with companies that promise to give you zero or extremely low tax liability. These firms will often charge you more in fees, skim funds from your return or divert the refund.
- Critique the Completed Return – Before signing a return that has been prepared for you check that it is complete. You should never sign a blank return or one that has not completely been prepared.
Safeguard Your SSN – Identity Theft Protection
Your SSN is crucial to identifying you in the United States. Protect it all times to prevent any fraudulent activity that can be traced back to you or your name.
- Don’t Carry Your Social Security Card – You are not required by any law to have your social security card on your person. If your wallet or purse is ever lost or stolen, the lack of your SSN will help to prevent identity theft.
- Keep Other Cards That May Contain Your SSN at Home – Check your other cards for your SSN, especially those related to your health insurance, and leave those at home as well until necessary.
- Avoid Using Your SSN on Other Identifying Cards –Always request that your driver’s license number or any other identification number not be the same as your SSN.
- Do Not Provide Your SSN Over the Phone – This includes all other personal identifying and credit card information unless you initiated the call with a trusted business or organization and have verified the phone number.
- Avoid Random Disclosure of Your SSN – Avoid giving out your SSN on documents where it is not necessary, such as medical forms and job applications.
- Know When Your SSN is Necessary – Your SSN is only needed for major financial transactions and for tax purposes, such as your tax forms, employment tax information and purchases or sales of property.
- Keep Your SSN Off of Your Account Records – Never allow a bank or other financial institution to use your SSN as an account number.
- Check the Government’s Credentials – If you are being asked by a government agency to provide your SSN, look for their privacy act notice. This will state if or why your SSN is required, how it is going to be used, how it will be protected and what consequences there are to not providing it.
- Examine Your Social Security Earnings Statement – Your social security earnings statement should arrive approximately three months before each birthday. Examine it carefully for any signs of fraud.
- Avoid Using the Last Four Numbers of Your SSN – While many businesses have begun using the last four digits only of your SSN to identify you remotely, this is not a recommended practice. This includes circumstances where it is being used to access online or telephone banking services, or as a default method to reset a password or pin number, especially where you are also asked for a simple identifier such as your ZIP code.
The Top 5 Worst Places to Use Your SSN – Identity Theft Protection
The online and anti-virus security company McAfee recently made headlines when they researched and released a study of the most dangerous places where you may be asked to provide your SSN. The list was ranked based on the number of data breaches – incidences where hackers infiltrated a computer system and were able to retrieve stored personal information – reported from January 2009 through October 2010, and revealed disturbing results:
- Universities and colleges
- Banks or other financial institutions
- State government agencies, and
- Local government agencies
Most troubling is that these are the very types of institutions where there is no alternative to providing your SSN in order to receive the services you need. Even in these situations there are steps you can take to help protect your identity:
- Ask Questions – Ask first if there are other options to providing your SSN, such as your name and address or date of birth. A number of business types cannot by law require you to provide your SSN, but you may need to speak with an individual who is overseeing the process, in order to help in finding an alternative.
- Never Give Out Your SSN to an Individual Who Contacts You Over the Phone – This is a common scam where someone poses as a representative of a trusted institution in order to obtain your SSN or other personal information. If someone calls you claiming to be from your bank, verify their identity first by requesting a call back number and verifying its authenticity online.
- Get Free Copies of Your Credit Report – Visit annualcreditreport.com and get free copies of your credit report from Equifax, Experian and TransUnion, and then study them to make sure that nothing appears out of place. You should also consider a fraud and credit monitoring service which will notify you if they notice any unusual activity related to your SSN.
Protect Your Checkbook – Identity Theft Protection
Despite the common practice of paying bills online and the use of debit cards, there is still a risk of check fraud. Taking these simple precautions will help prevent unauthorized or fraudulent use of your checks and checking account:
- Keep Your Checks Simple – Your checks should not contain any more information than necessary. Avoid having your SSN, driver’s license number, or phone number printed on the checks. When combined with other easily obtained information, a thief could be able to apply for a loan or credit card or create a fake bank account using your name.
- Use a P.O. Box – If you have a post office box use that in place of your physical address to help deter scam artists.
- Never Write Your SSN on a Check – Some merchants may try and write your SSN on a check in order to prove that you presented it to them. This is a dangerous practice and even illegal in some states.
- Pick Your New Checks Up – Don’t allow your bank to mail you your replacement checks, but rather pick them up at your local branch. If this is not an option, keep a close eye on your mailbox and notify your financial institution if they are not received in a reasonable amount of time or if any checks are found to be missing.
- Don’t Mail Your Bills From Home – When making payments through the post office, mail your envelopes from an official post office mailbox or straight from the post office.
- Use a Black Gel Ink Pen – When writing a check a gel ink pen will permeate the fibers and make it nearly impossible to wash the check and alter the information you have filled in.
- Shred Cancelled Checks – If your cancelled checks are returned to you, shred them, along with all of your bank statements, unused deposit slips and ATM receipts.
- Consistently Review Your Banking Statements – Go over your checking account statement line for line as soon as you have access to it and immediately report any discrepancies to your financial institution.
8 Tips to Protect Credit and Debit Cards – Identity Theft Protection
Those very cards that make your financial life easier can also wreak havoc on it when in the wrong hands. Take the time to safeguard these cards to avoid thieves accessing them and stealing your money.
- Limit the Number of Cards You Use – Keep the number of credit accounts you have to a minimum and only carry one or two cards with you at the same time.
- Cancel Unused Accounts – If you don’t need a particular credit account anymore, reduce your risk of fraud by cancelling it. In some cases this may adversely affect your credit score, but the alternative could do far worse damage to you financially.
- Keep Track of New Cards – Make a note of when a new card should arrive in the mail and contact the issuer immediately if it does not appear in your mailbox in an acceptable amount of time.
- Review All of Your Accounts Monthly – Your financial statements, bank and credit card statements, utility and phone bills should all be reviewed carefully for signs of unauthorized use.
- Keep a List of All Active Accounts – Make a list and photocopies of all of your open banking and credit accounts and keep that in a secure place at home. Have the account numbers listed alongside the customer service phone number so that the provider can be contacted quickly if your cards are lost or stolen, or your accounts are being abused.
- Avoid Debit Cards When Traveling – When making purchases in an unfamiliar place avoid using a PIN based debit card.
- Use Credit Cards For Merchant Purchases – Transactions that require you to enter a PIN are easily skimmed, and could make your checking account vulnerable to a thief.
- Hit the Credit Button – Run your debit card purchases as credit to avoid entering your PIN. There is more protective measures in place for your credit cards than there are for your cards which directly access your banking accounts.
What to Do If You Suspect That Someone Has Hijacked Your Identity or Stolen Your Credit or Debit Accounts
- Immediately file a detailed report with your local law enforcement department.
- Place a fraud alert on your credit file with any one of the three credit reporting bureaus. This signals potential creditors that you may have become the victim of identity theft.
- Review your credit report line for line and make note of all unauthorized and unusual activity.
- Place a security freeze on your credit report. This locks any access to your credit so that no new accounts may be opened using your personal identifiable information. This freeze can be lifted temporarily by you when applying for credit.
- Contact all of your existing creditors and inform them that you have recently been the victim of identity theft.
- A victim of debit card fraud should do two things immediately:
- Notify the financial institution. There is a limited time to dispute debit card fraud compared with fraud related to your credit cards.
- Cancel the existing card and request a new one. This will disallow the individual from continuing to gain access to your banking accounts.
If you need more information about the identity theft protection, please contact the tax experts at Artio Partners.