Identity theft is an increasingly prevalent crime in the United States, with a significant impact on personal finances and taxes. According to a bulletin from the Bureau of Justice Statistics, approximately 10% of Americans aged 16 and older fell victim to identity theft last year. This form of fraud can disrupt your life when someone uses your personal information to conduct transactions or other activities in your name.
Understanding the Threat
Criminals can exploit your identity to open or drain bank accounts, obtain credit cards, or secure loans. Beyond financial fraud, identity theft can also have severe implications for your taxes.
Common Forms of Fraud
- Employment Fraud: An individual may use your Social Security number to apply for jobs. When the employer reports the thief’s wages to the IRS using your information, it may appear that you have underreported your income when you file your tax return.
- Tax Refund Fraud: An identity thief might file a tax return using your name and Social Security number to claim a refund. When you later file your return, the IRS could mistakenly view it as a duplicate filing, assuming you have already received a refund.
Steps to Protect Yourself
To safeguard your identity, consider the following precautions:
- Be Discreet with Personal Information: When sharing personal details, exercise caution and be mindful of your surroundings.
- Verify the Source: Only provide personal information over the phone if you initiated the call and are certain of the recipient’s identity.
- Securely Dispose of Sensitive Documents: Shred any documents, receipts, or mail containing personal information such as your Social Security number, bank details, address, or date of birth.
- Avoid Using Your Social Security Number: Do not use your Social Security number as a password, PIN, or part of your driver’s license number unless absolutely necessary.
- Enhance Computer Security: Before entering personal information online, ensure your computer is protected with firewall programs, antivirus software, and secure browsers.
Responding to Identity Theft
If you suspect that your personal information has been used to commit tax fraud, it’s crucial to act immediately. Contact the IRS as directed in any notice you receive. Warning signs may include receiving statements for wages from an unfamiliar employer or learning that more than one tax return has been filed in your name. The severity of tax fraud cannot be overstated, and your swift action is essential.
IRS examiners can assist in resolving these issues in collaboration with the Social Security Administration and other agencies. They can help correct any inaccuracies in your tax records and provide guidance on protecting your identity in the future. It’s crucial to remember that the IRS will never initiate requests for personal information via email. Any such request should be treated with suspicion, as it is likely an attempt to steal your information.
Choosing a Tax Preparer
When it comes to choosing someone to prepare your taxes, exercising caution is key. This individual will have access to your sensitive financial records, so it is vital to vet their credentials and experience thoroughly. Avoid preparers who guarantee specific results, charge fees based on the refund amount, or claim to secure larger refunds than others. By choosing a reliable preparer, you can take control of your financial security.
Identity theft can have devastating financial and emotional consequences. For further information on protecting yourself or handling identity theft, visit the Federal Trade Commission’s website at www.ftc.gov.
Protecting yourself from identity theft is essential to safeguarding your financial well-being and peace of mind. By taking proactive measures and staying vigilant, you can reduce the risk of falling victim to this increasingly common crime. At Legacy Private Trust Company, we are committed to helping you secure your financial future. Should you have any concerns about identity theft or wish to discuss strategies for protecting your assets, we invite you to reach out to our team of trusted advisors. Together, we can ensure that your personal and financial information remains secure.
If you are a Legacy client and have questions, please do not hesitate to contact your Legacy advisor. If you are not a Legacy client and are interested in learning more about our approach to personalized wealth management, please contact us at 920.967.5020 or connect@lptrust.com.
This newsletter is provided for informational purposes only.
It is not intended as legal, accounting, or financial planning advice.
