Hacking Your Finances: Avoiding Tax Fraud

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Please note the publish date of this blog. Financial information, market conditions, and other data mentioned in this post may no longer be accurate or relevant.

A gentleman by the name of Benjamin Franklin recently called my mother. He claimed to be from the IRS and was reaching out to collect payment on a tax bill. Knowing that they were up to date on their taxes (and thanks partially to the tip-off from Mr. Franklin’s clever moniker), my mom assumed it was fraud. But when she called the IRS to verify, she found out that not only was the call fraudulent, but someone had filed a tax return in my parents’ names (using their real Social Security numbers) and had tried to get a refund.

Identity theft has been on the rise, and thieves have gotten increasingly clever at obtaining sensitive data and using it in even more creative ways. To keep yourself as protected as possible, here are some tips to keep you from being a victim of tax fraud.

Helpful Tips

File your taxes early: Many fraudulent tax returns are filed early, so the sooner you file, the sooner you can either beat the bad guys to the punch or discover that something is wrong.

Guard your Social Security number: Do not carry your Social Security card with you or supply it to anyone unless it is absolutely necessary (say, for a loan application). Anytime I am prompted for my number, I decline to provide it. Only if the institution really needs it will they request it a second time.

Keep personal data private: Many fraudsters scare the people they call with threats or lies. It’s easy to get rattled and provide the caller with information like your mother’s maiden name, Social Security number or bank details. Just remember to never provide private information to someone who calls you. Bonus tip: Tell a suspicious caller that you work for the federal government and that they are on a recorded line. Oftentimes, they will simply hang up rather than risk being tracked.

Check your credit report: Scan your credit report every few months. You are entitled to one free credit report each year from each of the three credit bureaus. Set up a reminder to pull one every four months so that you can check for fraudulent activity, like new accounts opened in your name. Do not get fooled by sites claiming to offer you credit reports for free—the only truly free credit report site is through annualcreditreport.com, which is authorized by federal law.

Call the IRS (yes, voluntarily): For all the flak they get, the IRS can be extraordinarily helpful. If you think that you may be a victim of tax fraud or identity theft, call the IRS and they can look up your account. You may have to sit on hold for a bit, but it is worth it.

Being Prepared Can Help Reduce the Risk of Identity Theft

There are a myriad of tools available to protect you from identity theft. The Internet is a great resource for verifying suspicious phone numbers (reverse lookup is a great tool), researching companies or advising on what to do if you are the victim of fraud. And if you, too, get a call from one of our deceased founding fathers, hopefully you feel more prepared to handle him.

Disclosure

Abacus Wealth Partners, LLC is an SEC registered investment adviser. SEC registration does not constitute an endorsement of Abacus Wealth Partners, LLC by the SEC nor does it indicate that Abacus Wealth Partners, LLC has attained a particular level of skill or ability. This material prepared by Abacus Wealth Partners, LLC is for informational purposes only and is accurate as of the date it was prepared. It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy or investment product. Advisory services are only offered to clients or prospective clients where Abacus Wealth Partners, LLC and its representatives are properly licensed or exempt from licensure. No advice may be rendered by Abacus Wealth Partners, LLC unless a client service agreement is in place. This material is not intended to serve as personalized tax, legal, and/or investment advice since the availability and effectiveness of any strategy is dependent upon your individual facts and circumstances. Abacus Wealth Partners, LLC is not an accounting or legal firm. Please consult with your tax and/or legal professional regarding your specific tax and/or legal situation when determining if any of the mentioned strategies are right for you.

Please Note: Abacus does not make any representations or warranties as to the accuracy, timeliness, suitability, and completeness, or relevance of any information prepared by an unaffiliated third party, whether linked to Abacus’ website or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

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