Protecting Your Identity at Tax Time

This time of year is stressful for many peoople trying to prepare their taxes before the April 15th deadline. Adding to the stress is the threat of identity theft.

A recent ABC news item (Prevent Tax Time Identity Theft, March 17, 2008) states that the Federal Trade Commission has received more than 20,000 complaints about thieves filing phony tax returns, with names and social security numbers of unsuspecting victims, and receiving their tax refunds.

Following are some suggestions for keeping your information safe -

* Don't use passwords with common information like your birthdate, mother's maiden name, social security or telephone numbers.

* Don't save passwords on your Web browser.

* Update firewalls and other protective systems on your computer.

* Password-protect tax returns that you print to PDF from your tax software to keep sensitive information secure.

* Encrypt tax documents being e-mailed to your accountant.

* Shred any paperwork with personal information before discarding.

* Store tax records and other important documents in a secure area of your home.

* Mail tax returns (certified mail) from the post office or a USPS mailbox. The ABC news item also suggests that, to prevent theft, returns should not sit in a mailbox overnight.

* Beware of e-mails or phone calls, seeking personal or financial information, that appear to be from your bank, the IRS, your credit card companies, etc. These entities already have this information and don't request it via e-mail or phone. Never provide such information unless you have initiated the call or e-mail. And, never -- ever -- click on a link in one of these e-mails.

If you believe you are a victim of fraud, contact the IRS and its taxpayer advocate service, which has been set up to help people who have been defrauded. Also file a report to the FTC, through its website, and to your local police. Request a free copy of your credit report (from each of the the major credit reporting agencies), as a victime of identity theft, and place a fraud alert on your credit reports. When they arrive, check your credit reports carefully. Look for inquiries from companies you haven't contacted, accounts you didn't open, and unexplained debts. Close any accounts that have been tampered with or opened without your knowledge.