Thinking about putting off filing your taxes for several more weeks? There's a compelling reason why you might not want to.
How to avoid tax fraud
During the last few years, crooks have been stealing people's Social Security numbers and then filing false returns as though they were those people. The crooks typically claim low income and high deductions and file electronically. Then when you go to legitimately file your return, it's rejected by the IRS because somebody else already filed as you!
The whole mess typically takes about 10-14 months to straighten out if you're on the receiving end of the scam.
For that reason, I've advised callers to make sure they owe the IRS rather than the other way around. In other words, reduce your withholding at work. That way you're not waiting around for money you can't get your hands on. (It's too late to do it for this current tax season, but it will help you come next year at tax time.)
Fortunately, the IRS has now trained almost half of their 80,000 employees to spot identity theft and maybe prevent some of it. They have had to dedicate somewhere between 3,000 and 4,000 employees specifically to the task of help victims of identity theft.
The number of false returns filed last year was 15 million, and those are just the ones they stopped. Many more fradulent returns made it through.
For more on taxes and preventing fraud:
- 12 red flags that will get you audited by the IRS
- What to do when you can't pay your taxes
- Fixing the broken tax code