A client recently told me a harrowing story of how his employer had accidentally leaked personal information about every employee to some Nefarious Agents. My client went right home and froze all his credit accounts and immediately filed his taxes.
[Note from Meg: This is actually a years-old blog post that, thanks to some tech snafu, has been published anew. Still looks relevant, so there you have it!]
Some of his work friends did not file their taxes ASAP, and by the time they did, they discovered that the returns had already been filed, a refund claimed, and that refund paid by the IRS. Paid to someone else.
I at first thought, “Oh, hey, this must only be a problem if you are due a refund, so you should set up your taxes so you aren’t due much of a refund.” But no (and may I add on my own behalf, DUH), it doesn’t matter what your tax situation is in reality. People who file fraudulent tax returns in your name can just Make Shit Up. They’re under no obligation to report any real numbers.
Whether you’re due a refund, or you have tax due, if someone files a fraudulent tax return in your name, then when you file your taxes, the IRS will basically say, “Um, dude? You already filed your taxes. You can’t file again.” At which point, you say, “DUDE. I did not already file my tax return” and then proceed to have a nervous breakdown.
I’ve never dealt with this myself or with a client, but I am assured that all hope is not lost. Your taxes will eventually be straightened out.
If you are due a refund, you will eventually get it. Just settle in for months (and possibly months) of annoying administrative work. Which does, in fact, argue for not overpaying taxes too much throughout the year, lest it be a loooong time until you see that money.
This article talks about what to do if you find that someone has filed fraudulently in your name. But my whole point in this post is to pass along preventative advice.
Two ways to protect yourself from fraudulent tax returns that make your life an administrative nightmare:
#1 (The most reliable) Get an Identity Protection (IP) PIN from the IRS.
And I quote (the IRS):
The IP PIN is a six-digit number assigned to eligible taxpayers to help prevent the misuse of their Social Security number on fraudulent federal income tax returns. An IP PIN helps the IRS verify a taxpayer’s identity and accept their electronic or paper tax return. When you have an IP PIN, it prevents someone else from filing a tax return with your SSN.
Oddly, the program isn’t yet available nationally. But if you filed a tax return in 2018 in New York, California, or Washington, you’re good.
#2 (Maaaybe helpful) File your taxes as early as possible.
If you get your tax return in before the bad guy does, then you win! As nice as that sounds, I’m not sure how realistic this is, however, as criminals can file taxes on Day 1 (they’re just making sh*t up, after all) and you, realistically, aren’t filing until at least February.
If you want to explore working with a financial planner, reach out to me and schedule a free consultation.
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Disclaimer: This article is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. I encourage you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Meg Bartelt, and all rights are reserved. Read the full Disclaimer.