The clock is ticking; if you haven’t already filed your 2012 tax returns, you have less than a month left to get the return filed on time with the IRS. Even if you find yourself waiting until the last minute, don’t get sloppy because mistakes can be costly, in more ways than one. Mistakes on a return could lead to an IRS audit, and mistakes while preparing to file your return could also lead to identity theft.
Tax time is the peak season for identity theft, but the experts at Grinnell Mutual, IDentity Theft 911 and LifeLock have some easy-to-follow tips to keep your information safe.
With the rise of the digital age came the emergence of online financial services. The key to keeping your financial information secure is a strong password. I’m not talking about adding a number to an otherwise easy password, I’m talking about a password that uses a combination of upper and lower case letters, numbers and special characters. Don’t reuse the same password across all of your banking sites, either. If one site is compromised, then a savvy hacker could have instant access to all of your finances.
2. Secure storage
Piggybacking on the secure password tip is the need for secure storage. While the cloud provides convenient access to stored files regardless of your location, IDentity Theft 911 recommends a "password-protected or encrypted external drive or disk, and store it in a secure location, such as a safe-deposit box or a locked safe. If you store it on your computer, make sure the drive is encrypted." Honestly, I don’t even own a safe-deposit box and I don’t ever see myself purchasing one just to store an external hard-drive, but you can get creative and hide a drive in your house. For an offsite storage solution, have a backup copy at a trusted relative’s house.
3. Know the IRS
LifeLock is active on social media; earlier this month the company sent out the following tweet, "Tax Tips: Remember, the IRS never initiates contact with taxpayers by email or social media." LifeLock also advises taxpayers to know what the official IRS website is — IRS.gov and that’s it. Hackers can easily setup a spoof site that looks official but isn’t, catching unwary consumers off-guard.
4. Research your tax professional
Another tweeted tax tip from LifeLock is on the topic of tax preparation. If you’re planning to hire a third-party, "always vet your tax preparation company w/the Better Business Bureau by visiting your state's BBB website." Grinnell Mutual takes this advice further, recommending that taxpayers also verify the preparer with the IRS Office of Professional Responsibility (OPR). "Email the IRS at firstname.lastname@example.org with the full name of the individual or company and their address to confirm they’re a legitimate operation."
5. Go electronic
Filing an electronic return and opting for direct deposit of a tax refund is not only easy but it is also another great way to avoid identity theft during tax season. Thieves are on the lookout for tax refund checks, not just for the value of the check but also because of the information it holds.