The Big Reason to File Your Taxes in January

Introduction

For most Americans, the deadline to file tax returns with the IRS is April 15. However, there is one compelling reason you may want to file your taxes as early as January: avoiding identity theft.

Image Description: A person filing taxes early on a laptop to avoid identity theft.

What is Tax Identity Theft?

Tax identity theft occurs when criminals file a falsified tax return using another individual's Social Security number to claim a refund. Once they receive the refund electronically or by mail, they convert it into cash to cover their tracks. Taxpayers often remain unaware of this until the IRS notifies them that a return has already been filed using their Social Security number.

Image Description: Infographic explaining tax identity theft and how it occurs.

How to Avoid Tax Identity Theft

Filing your taxes as soon as possible, ideally in January, significantly reduces the window of opportunity for criminals to file a fraudulent return in your name. Here are some additional steps to protect yourself:

• Use secure software with firewall and antivirus protection.
• Use strong, unique passwords for all online accounts.
• Ignore requests for personal information from unsolicited emails or phone calls, even if they claim to be from the IRS.
• Avoid clicking on links or attachments from unverified emails.
• Take extra measures to protect your personal information and consider purchasing identity theft insurance.

Image Description: A person using secure software and strong passwords to protect their identity.

The Role of Tax Preparers

Tax preparers can also be vulnerable to scams, so it’s crucial to ensure they follow best practices. Make sure your tax professional signs the tax form they prepared and enters their preparer tax ID number. Additionally, your contact information and bank account number (for direct deposit) should be provided on the tax return.

Image Description: A tax preparer reviewing documents with a client.

What to Do If You're a Victim

If someone has already filed a tax return using your Social Security number, the IRS will send you a written notice. You should call the number provided or visit the official IRS website to learn how to report the issue. Additionally, you’ll need to complete Form 14039, the Identity Theft Affidavit, and send it to the IRS.

Signs of tax identity theft may include:

• Notices of additional taxes or income records from employers you don’t work for.
• Receiving a tax refund you weren’t expecting.
• Receiving a W-2, 1099, or other documents for income you didn’t earn.

Image Description: A person filling out Form 14039, the Identity Theft Affidavit.

Conclusion

Filing your taxes in January can help you avoid the nightmare of tax identity theft. By using secure software, strong passwords, and following IRS guidelines, you can protect your personal information. If you become a victim, report it immediately and take steps to resolve the issue with the IRS.

Image Description: Infographic summarizing the benefits of filing taxes early to avoid identity theft.