Watch Out for Tax Refund Fraud

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taxreturnfraudNow that tax season is underway and you can file your taxes, it’s important to be on the alert for tax refund fraud. If you are due a tax refund, according to Yahoo! Finance, you might not get it if you don’t act fast.

How Tax Refund Fraud Works

With your name and Social Security number, a fraudster can apply for credit in your name. However, he or she can also get a tax refund that is rightfully yours — or even claim a refund that you aren’t entitled to — causing a snarl with the IRS.

It’s pretty simple and straightforward. The fraudster fills out a tax return using your name and Social Security number. He or she claims credits and deductions, enough to warrant a refund. Then, the return is filed quickly and the paperwork processed. The fraudster gets a check and then disappears.

Meanwhile, you are meticulously gathering documentation and preparing your own return. When you file your return, the IRS sends back a notice saying that you have already received a refund. If you owe taxes, though, this situation can trigger problems since the IRS has already paid out a refund.

Now, the burden is on you to prove your identity, and show that you didn’t claim the refund. It’s a hassle, and it can take months to straighten out the mess.

According to the Yahoo! Finance story, the IRS is boosting its efforts to identify suspicious tax returns. Unfortunately, there’s not a lot you can do to fully protect your information in this age of data security breaches. The best way to protect yourself and your refund is to beat the fraudsters to the punch by filing your own tax return as early as you can.