How to Prevent Tax Identity Theft

When it comes time to file taxes, many worry about whether they’ll owe money — or will their much-anticipated refund be big enough to fund their plans. Unfortunately, recent increases in scams and security breaches have made crimes like tax identity theft a bigger risk than ever, adding a new source of anxiety.

In 2023, the IRS identified more than 1.1 million tax returns as possible identity theft cases, involving roughly $6.3 billion in refunds.

As these crimes become more common, one way to keep your information safe is with an identity monitoring service like ProtectMyID, powered by Experian, free with your AAA membership.

What Is Tax Identity Theft?

Tax identity theft occurs when someone uses your Social Security number and personal information to steal your tax refund, file a false tax return, apply for a job or worse.

Identity thieves obtain your confidential information through data breaches or stolen documents, according to Experian. Some scammers impersonate the IRS using phishing scams, such as phone calls telling a person they owe taxes and need to pay them right away.

If someone uses your information to obtain a job, you also could get penalized by the IRS for not reporting additional income on your tax returns.

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What To Do if You are a Victim of Tax Identity Theft

Signs of tax identity theft usually surface when a person files their tax returns and never receives a refund they were expecting or the IRS alerts them that they have received more than one tax return in their name.

All of this adds up to an ordeal for the taxpayer. If fraud is determined, you will need to alert the IRS, the Federal Trade Commission, local law enforcement and the three credit bureaus. You may also want to consider freezing your credit file. This prevents scammers from opening accounts in your name.

It can take up to 19 months for actual tax returns to be processed and any refunds paid.

How to Prevent Tax Identity Theft

• Sign up for ProtectMyID. The program has three levels to choose from (Essential is free for all AAA members) and each provides credit monitoring and help resolving fraud.
• Open an IRS account and apply for an IP PIN. The six-digit number, known only to you and the IRS, prevents anyone else from filing a tax return using your Social Security number.
• Familiarize yourself with the types of communications the IRS uses, so you won’t be fooled by fake emails or phone calls. The IRS will not call or text you. The agency typically contacts taxpayers by mail. They will send a letter if identify theft if suspected; follow the instructions in the letter exactly to validate your identity.
• Avoid sharing your confidential information online. If you file your returns online, ensure you are using secure software.

Learn more about how to protect your financial and personal information with Experian.

Are you concerned about tax identity theft? Tell us in the comments.

Ellen R. Delisio

Ellen is a content producer for AAA Northeast, covering automotive, finance, public affairs and electric vehicle news. She is a former newspaper reporter with experience writing for print and online publications about everything from higher education to sustainability. She recently returned to her native Long Island after living in Connecticut for 20-plus years, and has never met a beach she didn’t like.