Get Your Income Tax Refund Before Someone Else Does

You can (probably) beat the crooks to your tax refund. Photo: Marie-Lan Nguyen via Wikimedia Commons.

Here's the good news: Tax season is upon us, and millions of taxpayers can eagerly await their income tax refunds once they've filed their returns. Unfortunately, there's some bad news: Identity theft and tax-refund fraud are on the rise, and some crook might nab your refund before you do, causing a lot of headaches and possibly some financial stress. You can take steps to avoid being victimized, though.

The problem

First, though, know that it's not an extremely remote possibility that you'll be a victim of tax-refund fraud. It's now the biggest tax scam going; the IRS estimates that it sent nearly 3 million refunds to fraudsters, costing us taxpayers more than $5 billion.

Here's how it works: With just a few pieces of information on you, such as your birthday and Social Security number, someone can steal your identity and file a return with false information on it, including their address, not yours. Then your refund gets sent to the culprit. And when you file your return, you learn that your refund has already been issued. The bad guys have plenty of ways to get your personal information, such as "phishing" for information via phone calls or emails. You need to be vigilant and cautious.

Tax refund fraud is

a growing scam.

To make matters worse, years of budget cuts have reduced the IRS' workforce, putting pressure on its ability to fight this scourge. It's taking the threat seriously, and it prevented nearly 15 million fraudulent refunds from being claimed between 2011 and late 2013.

The earlier you file your return, the earlier you'll get your refund -- and the less time fraudsters will have to impersonate you and grab your money. The IRS begins accepting electronically filed returns on Jan. 20 and begins processing paper ones then, too. It wants people to know that electronic filing is "the most accurate way to file a tax return and the fastest way to get a refund."

Once the IRS has your return, it aims to issue a refund (if applicable) in fewer than 21 days. However, the IRS Commissioner recently announced that because of budget cuts and reduced staffing, refunds might be delayed by a week or more. Impatient folks can check on the status of application processing and refunds via the IRS' IRS2Go  mobile app and its online Where's My Refund? tool.

The upside of having your refund direct-deposited is that you will get your money sooner, as you won't have to take your check to the bank -- and it also won't get lost in the mail, misplaced, or (gulp ) get stolen.

Photo: Flickr user Frankieleon.

Source: www.fool.com

Category: Taxes

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