Let's face it -- your tax return contains virtually all of the information a thief would ever need to steal your identity. It has your address, birthday, Social Security number, and employment information. It may even have your bank account information if you have your refund direct deposited.
You need to take extra steps to protect your tax return and the valuable information it contains from identity thieves. Here are some things that you should be doing already, but are especially important around tax time.
Be careful when mailing documents
Are you planning to mail in your tax return? Under no circumstances should you put it in your mailbox for your mail carrier to pick up -- mail it at the post office instead. Or better yet, send it via priority mail or FedEx so you'll be able to track it. Thieves are known to hunt for useful information in your mailbox; there's no reason to help them in this regard.
The same can be said for any correspondence you receive from the IRS. While the IRS generally won't send your Social Security number through the mail, there's always the possibility that your tax documents will be returned to you for insufficient postage, misspelled address, etc. Around tax time, try to collect your mail in a timely fashion.
You should also know when to expect your return check if you don't use direct deposit, so you can keep an eye out for it. The IRS has a "where's my refund" tool you can use that can tell you when your refund will be processed. This way, you'll know when to keep a closer eye on your mailbox.
Your refund: don't get a prepaid card
Many people choose to have their tax refunds loaded onto prepaid debit cards. While this may be convenient for taxpayers without a checking account, it can be a risky way to get your return. Because prepaid debit cards are anonymous and untraceable by nature, all a thief would need to do is steal the card out of your mailbox, and then use it.
Having your return directly deposited into your checking or savings account is the most secure way to do it. However, having a paper check issued is still more secure than a prepaid debit card, as it's tougher to cash a check in your name than to use a prepaid debit card.
Monitor your credit
This is something everyone should be doing anyway, and it's a good way to make sure that none of your personal information has been used fraudulently.
This doesn't need to cost you an arm and a leg. Under the current law, you're entitled to a free copy of your credit report from each of the three bureaus once a year. If you space them out, you can get a free report from one of the bureaus every four months. Make sure you request them from the official website and not from one of those "free credit report" sites that wants you to sign up for other product trials.
Once you have your credit report, check it for the following information:
- Any credit accounts you don't recognize
- Addresses that aren't yours
- Credit inquiries that you don't remember authorizing
- Collection accounts
If you want to go a step further, you can sign up for a credit monitoring service, which will alert you every time there's a major change on your credit report. My personal favorite is myFICO.com, since it also gives you your real FICO credit score that most lenders use.
Use strong and unique passwords
Do you know what the most common password is that people use to protect their email and other online information? Believe it or not, it's "123456." How creative. In fact, take a look at the five most common passwords people use:
This should go without saying, but make sure that all of your passwords are significantly stronger than these. Make sure you use tough-to-guess password features, such as a mixture of uppercase and lowercase letters, numbers, and special characters.
If you use an online tax-prep program such as TurboTax, make sure you use a different password for that site than you do for your email and other accounts. This way, if a thief happens to hack your email, they won't have the password to your entire life.
A final thought
In a nutshell, your tax return is one of the most sensitive documents you'll ever fill out in terms of personal information. You need to take extra care to make sure that information doesn't fall into the wrong hands. If the worst does happen, the IRS has a useful guide for victims of identity theft, so you can make sure you'll know what to do.