By this point, you’ve certainly heard about the Equifax data breach. More than 143 million Americans have had their information comprised.
In addition to the muddled response from the corporation itself, the resignation of the CEO, and a customer service website that didn’t seem to work properly, there has been confusion about how best to address this issue. Having your data comprised or stolen is a stressful situation, and it can be difficult to keep track of every step to fix your finances after the hack.
The worst part of this situation? The negative financial implications may just be starting.
Articles are already appearing about fake tax returns being filed, identities being stolen with hacked social security numbers, and falsified mortgages filed in the name of individuals whose information and identities have been stolen.
The absolute first thing to do is to contact your CPA or tax provider and set up a plan of action to make sure your finances are in good shape for this coming tax season — leverage their expertise to help you.
Fraud possibilities are enough to make anyone break out into a cold sweat, so let’s take a look at steps you can take today to protect yourself today:
1. Realize this year will be tough.
Following the immense coverage of the Equifax data breach, and the exposure of consumer information, the IRS will (understandably) be keeping a very close eye open for fraudulent returns this year. Make sure your information is filed on time and accurately, but understand that you may still end up waiting longer than usual for your tax return.
2. Know the limits of credit freezes.
The first steps many individuals took, logically enough, were to put credit freezes into place, set up fraud alerts for credit cards in your name, but that is not sufficient enough for tax season. Having a credit freeze or other monitoring tools in place will not prevent tax related fraud — in 2016 the IRS, despite beefed safeguards, still paid out $239 million in suspect refunds.
3. Review your most recent tax return.
If your information has been comprised, the first thing you should start thinking about is filing your tax return early, but before filing there are some steps you can take today. Going over your most recent return gives you a good framework and estimates as to what you should expect this year.
The more prepared you are, the better position you will be in to spot any discrepancies on your current tax return. Doing this also helps you organize and track what documents you will need come tax time.
4. Get ready to file early.
One of the best ways to get ahead of fraudulent tax returns is to file your return early, but in order to file early, you have to be prepared ahead of time. Steps that you can take today include gathering receipts for any charitable deductions, making a list of key documents you will need, and monitor any online portals you will receive information from.
For example, some 1099’s may online be available online. Don’t forget these important pieces of information.
5. Monitor your tax record in real time.
The IRS has an online site that allows taxpayers to see details of their tax account, including changes and other information, online, at any time. But setting yourself up can be an involved process.
The IRS requires a large amount of personal information, and the setup process is stringent, so be prepared to invest some time and effort in this process. This, in the face of Equifax hacks, may be an idea worth pursuing this year.
6. Think about getting a tax PIN.
While the IRS does offer a service called an identity protecting PIN, or IP PIN, but taxpayers can obtain a PIN only if you’re already a victim of tax identity theft. Keep in mind that if you do qualify, and choose to sign up for a PIN, you must use it every year moving forward. In light of the Equifax breach, this may change, so this is something to definitely talk to your CPA or tax preparer about.
7. Don’t forget about other scams.
This year will obviously be dominated by the implications of Equifax scandal, but don’t lose track of the other numerous scams that arise every tax season. Remember, the IRS will never start a proceeding with a taxpayer via email or on the phone — this year will be no different.