Preventing Identity Theft: How To Keep Your Information Safe

Hello, readers! Welcome back to the Hoods Tax & Accounting blog! If this is your first time here, welcome! We’re delighted to be able to share up-to-date information about taxes, bookkeeping, and accounting. Our blog is also dedicated to educating you about tax-advantaged savings accounts, tax provisions, programs, and more! We aim to provide you with the tools needed to meet your short and long-term goals. Our seasoned professionals are experts on the tax code, eligible deductions, and QuickBooks—all necessary fundamentals for saving you money! The Hoods Family has been around since 1988 and our comprehensive accounting and tax planning services are among the best in the Lowcountry. If you’re in need of tax preparation, accounting, QuickBooks training, or business consulting services, do not hesitate to schedule an initial consultation! We are officially in tax season, and Tax Day is fast approaching. We recommend preparing early to maximize your savings and refund. We do offer contactless services using a combination of over-the-phone consultations and digital drop-offs, for safety and convenience. You can read more about our hours and submit a request for a meeting using our website!

As we close out the month of April, we’d like to congratulate you on making it through another tax season! As always, we are still available to help with any questions or concerns you may have. Before we get into today’s topic, we would like to make you aware that starting in May, we will offer tax planning appointments to assist with questions about withholding, small business tax, retirement and investment accounts, sale or purchase of rental properties or other estate, and more! Reach out to us to set up an appointment with one of our knowledgeable tax professionals. 

Today, we’ll be discussing how to keep your information safe and protect yourself from identity theft and tax refund fraud. Tax season may be over, but thieves and scammers are always lurking, so it’s important to keep your personal information safe year-round. If you’re interested in learning more about how you can prevent identity theft and fraud, you’re in the right place! Let’s get started.

Tax-related identity theft occurs when someone steals your personal information to commit tax fraud. This typically occurs by the thief filing a tax return with your information, including your Social Security number, and claiming a fraudulent refund. People are often unaware that their personal information has been stolen and used to commit tax fraud until they file their tax return. While this type of identity theft is generally less common than others, it can still happen, so you should always do your best to keep your personal information safe. Luckily, there are multiple things you can do to prevent tax-related identity theft.

Protect Your Online Data and Identity

These days, most people are always on a mobile device or computer. We do a lot of things via technology now– Including filing our taxes or filling out forms containing our personal information. With that being said, it is extremely important to have security software downloaded on your computer. You’ll want to at least have a basic security software installed, and make sure that it updates automatically. Essential software to download includes virus and malware protection, as well as a firewall. A firewall is a network security system that monitors incoming and outgoing network traffic. It provides protection from cyber-attacks by shielding your computer. Not only can these softwares protect your computer from viruses, but they can also prevent people from accessing files containing personal information.

Another way you can protect your digital identity is through encryption programs. Encryption is an encoding process that converts information into scrambled text that only authorized users can understand. It is essentially a building block of cybersecurity– It protects sensitive information by keeping it confidential.

One of the most important efforts you can make to protect digital information is by creating and utilizing strong passwords. Coming up with a password that is difficult to guess; Do not use your own name or a common number sequence such as “123”. You should also avoid using personal information within your passwords, like birthdays or the name of your street. Longer passwords tend to be stronger, so try to come up with a password that is at least 12 characters long. It is also important that every password you use is unique. In other words, do not reuse passwords, especially for websites containing private information, such as online banking. If you need to write your passwords down to keep track of them, do not leave them out in the open where they are easily accessible. Put them in a secret or secure place, or use a trusted password managing tool. 

Many websites and apps offer two-factor or multi-factor authentication. These methods require a user to provide multiple forms of identity verification before accessing an account. This might require your username and password, and then a one-time code sent via text or email. It is essentially an extra layer of security or protection to make sure it is actually you logging into your account. If multi-factor authentication is offered, take advantage of it to keep your personal information secure.

Be Aware of Phishing and Scams

Identity thieves use emails or texts to trick users into revealing passwords or other personal information. This process is known as phishing. The sender of the message will often pose as a reputable company or organization, such as the IRS, a bank, or a credit card company. They often attempt to trick the user into clicking on a link by saying they have noticed suspicious activity on the account, need the user to make a payment, or ask them to confirm personal information. Scammers are always updating their tactics and are often successful because their emails or messages look incredibly real– So how can you tell if it’s a scam? 

• Check the originating email address domain: If an email is claiming to be from your bank, but the email address is being sent from another domain like Gmail.com, it is likely a scam. Also, check for misspellings within the domain name– Scammers often replace certain letters, such as using a “0” instead of “O”.
• Look for generic greetings: If you have an account with a company, they should know your name. Scammers often send out generic greetings like “Dear sir or madam” instead of addressing the email to a specific person.
• Spelling and grammar: If an email address has obvious spelling or grammatical errors, it could be a warning sign that it is a scam. Reputable and professional companies often have editorial staff to proofread content before it is sent out. 

It is also important to note that the IRS in particular does not use email, text messages, or social media to discuss tax debts or refunds with taxpayers. Additionally, the IRS will not demand immediate payment using a specific payment method, and will not threaten to involve local police or other law enforcement. The IRS initiates most contact through regular mail delivered by USPS. If you receive an email, text, call, or other message from someone claiming to be the IRS, do not reply to it or click on any links. You can report phishing scams directly to the IRS through their website.

Get An Identity Protection PIN

As long as you can verify your identity, you are eligible for an Identity Protection PIN through the IRS. This is a 6-digit pin that prevents someone else from filing a tax return using your Social Security number or Individual Taxpayer Identification Number. The pin is only known to you and to the IRS, so it helps verify your identity when filing a tax return, and it protects your account overall. The IP PIN is valid for one year, with a new one being generated for your account each year. This offers an extra layer of protection for your personal information. You can get an IP PIN on the IRS website. 

These are just a few of the steps you can take in order to keep your personal information safe and prevent tax-related identity theft. We hope you found this article helpful, and we encourage you to stay safe out there! Here at Hoods Tax & Accounting, our tax professionals protect your privacy and uphold the strictest confidentiality policy. If you have any questions regarding your taxes, or if you need help with tax planning, contact us! As stated above, Hoods Tax & Accounting offers a variety of services including small business consulting, QuickBooks training, tax preparation, accounting, payroll, and more! Visit our website for more information, as well as helpful links to resources you may find useful. Thank you for reading and we hope to see you back next time to keep learning about various tax and accounting topics!