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E-filing taxes? Watch out for fraud

E-filing taxes? Watch out for fraud
© Roman Romaniuk | Dreamstime.com

It's that time of year again: time to get your taxes in order. The IRS Free File option is a quick, easy and free way for people with an income below $66,000 to file their annual taxes. Eleven different software companies offer this option, ranging from TurboTax All Free to H&R Block’s Free File to TaxSlayer.

According to the Free File Alliance, around 100 million Americans qualify to use the free filing software. But not all is rosy when it comes to filing your taxes. Tax-time scams and fraud are on the rise and online filers need to be wary of potential security and privacy issues.

Your tax information is some of the most sensitive personal data you have, so it’s no surprise fraudsters would love to get their hands on it. Heed IRS warnings and take steps to protect yourself when you file this tax season.

Choose your e-file provider wisely

The Online Trust Alliance (OTA) took a close look at free e-file sites in 2016 and found that about half of them failed to adequately protect consumers at that time. Issues ranged from poor site security to potentially opening consumers up to fraudulent and malicious emails.

The OTA’s report spurred the e-file providers to respond and improve their security measures, which earned all of the free-file companies a spot on the OTA’s honor roll. This is good news when it comes to the security of your personal data, but you still need to exercise caution this tax season when filing online.

Whether you choose the free-file option or use a paid service, be sure you are using a legitimate provider. The IRS will link you directly to qualified free-file companies after you complete a short online form.

Check out our guide to filing your taxes for free.

Beware of email scams

The IRS has issued several alerts this year warning taxpayers about tax scams. The IRS’s 2018  “Dirty Dozen” list of schemes includes identity theft and phishing emails. The warning is stark: “The IRS continues to see a steady onslaught of new and evolving phishing schemes as scam artists work to victimize taxpayers during filing season.”

Phishing emails are a particularly worrying problem. “Emails can seek information related to refunds, filing status, confirming personal information, ordering transcripts and verifying PIN information,” the IRS has said.

While certain emails may look official, they may be coming from criminals who are looking to file false tax returns. You may not even know you are a victim until you file your return and receive a rejection because it has already been filed. Links in these fake emails can lead to websites that may look legitimate but aren’t. The IRS reminds taxpayers that it generally doesn’t communicate with them through email, text messaging, or social media channels.

If you receive a suspicious email, don’t click on any links. Forward suspected scam emails to phishing@irs.gov for investigation.

Learn all about tax deductions for your tech buys.

A phishing scam with a twist

The IRS says it has seen thousands of taxpayers fall victim to an unusual new phishing scheme in 2018 that uses your own banking account. This nefarious approach involves stealing taxpayers’ information, filing false returns, and then using the victims’ real bank accounts to deposit the refunds.

The thieves then contact the target and try to extract the money by posing as a collection agency or as an IRA representative. The IRA warns citizens to be on the lookout for unexpected bank deposits. If this happens to you, you will need to return the funds through proper channels.

The IRS encourages taxpayers to protect themselves with these simple tips:

  1. Use up-to-date antivirus software on your computer.
  2. Learn to spot phishing emails, phone calls, and texts. These false messages may seem to come from legitimate sources, such as banks or the IRS. Be wary.
  3. Don’t click on links or download attachments from suspicious emails.
  4. The IRS says to "treat personal information like cash." Secure your tax records and don’t leave them lying around.

A little bit of caution can go a long way in protecting you from fraud so you can look forward to e-filing your taxes in peace.

Don’t wait until the last minute to file your taxes.

The tax deadline is coming fast, but there are a lot of ways to get the chore done.

Click here to learn how to prepare and e-file your taxes from any device.

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