A new year means it’s time for a new start – and it also means that tax season has arrived. When tax season begins every January, the IRS reminds American taxpayers that it’s a smart idea to file your taxes early. Despite this, most people wait until the end of tax season to file their returns.
However, waiting until late March or April to file your taxes is a bad idea. In fact, it can be quite dangerous.
Filing close to the annual IRS deadline can create a delay in processing refunds and tax returns can get lost in the shuffle. But even more importantly, it can make you vulnerable to criminal acts. It could help thieves get their hands on your information and your tax refund.
Here’s why waiting until the end of tax season to file your taxes isn’t such a great idea.
Waiting to File Puts You at Risk for Identity Theft
Identity theft is one of the most frightening crimes that can happen today. And thanks to the prevalence of technology, it’s also rapidly becoming one of the most common. Criminals can access your most important personal information, then use that information to steal money, destroy your finances, and cause havoc.
And what many people don’t realize is that waiting to file your tax return leaves you vulnerable to an entirely new kind of identity theft.
More and more criminals are using stolen personal information to file fraudulent tax returns. In 2015, the IRS caught nearly 5 million suspicious tax returns. In 2013, the IRS paid out over $5.8 billion in fraudulent refunds thanks to fake tax returns filed by identity thieves.
And the problem is still growing. Although the IRS has taken steps to make American aware of this kind of identity theft, it happens every year during tax season. It’s especially common thanks to the data breaches that have happened in recent years.
Here’s how it works. Once criminals get your personal information – typically your address and Social Security number, which is all that’s needed for your tax return – they use it to file a fake return. And they do this early on in tax season, often right after the IRS begins processing refunds.
These fake returns are filled with inaccurate information, and they often claim refunds of thousands of dollars. If the IRS processes the return and the refund, your taxes will technically have been filed for the year. So, when you go to file your actual return, you’ll face a huge problem.
If you get a notice from the IRS that there’s already a return on file for your Social Security number, that’s how you know you’ve been the victim of identity theft.
Filing Early Can Prevent Criminals From Stealing Your Refund – And Your Information
If identity thieves are so easily able to get their hands on the information they need to file fake returns, what can you do to stop it? Well, you can file your taxes early.
Filing your taxes early is the best way to guard against identity theft. When you file early, you can beat criminals to filing a fraudulent return in your name.
Filing early essentially “locks down” your Social Security number so that others cannot file in your name. If another return comes in that uses your Social Security number and personal information, the IRS will notify you – and reject the return.
From there, you can take action to verify whether or not your information is being used elsewhere by criminals.
Protect Your Tax Return By Taking Action Today
Even if you think your most important personal information is well-protected, there’s still a chance that you could be affected. Criminals can file false tax returns – and claim unearned refunds – on your behalf. All they need is a small piece of your personal information.
In order to protect yourself, get a head start on tax season. Prepare your tax return well ahead of the April deadline. Filing as early as you can will help you lower your risk of potential identity theft. If you file early, you can get ahead of any thieves who plan to file false refunds using your information.
Make sure your tax return is ready to be filed as soon as possible. You can enlist the help of tax experts, like a tax professional or a tax prep company, to help. These services can ensure your tax return is correct, and that it’s prepared for the IRS in a timely manner.