Reducing The Effect Of Possible Identity Theft Of Your Refund

One way to protect yourself from theft of your income tax refund by identity thieves is to not have a refund to steal.

Thieves file fraudulent returns early in the filing season to claim refunds in the names of others. Although the filed returns may in no way resemble what the legitimate taxpayers are owed, once refunds have been issued, second ones will not be paid once the valid returns are filed later. Investigations to clear up the matter result in delays of up to nine months for the valid refunds to be paid. The Internal Revenue Service intercepts about one-half of the fake refunds claimed, but if yours is among the other one-half, nine months is a long time to wait for your money.

By having less tax withheld from your paycheck, you will minimize the size of an income tax refund. You can do this by filing a new Form W-4 with your employer and claim more withholding allowances. A new W-4 can be filed any time during the year.

Many taxpayers have historically used an income tax refund as a financial savings mechanism. With today’s theft problem, it is better to have that money at your disposal during the year to spend or deposit into a secure savings account. Otherwise, you may not have it for an intended purpose for a long time.