Tuesday, October 12, 2010

How to Protect Yourself from Identity Theft

Identity theft can happen to anyone, anytime. Identity thieves don’t just steal your property, they steal you! In our modern world, it is easy for someone to steal your social security number (SSN) to get a job, credit card, loan, or control of your records. Your social security number is the only means of identifying yourself to the IRS, credit bureaus, and other important financial entities. The damage caused by identity thieves is difficult to detect, can cost you thousands of dollars, and can take hundreds of hours to fix. Your SSN is your lifeline to the Internal Revenue Service (IRS) because with your SSN, the IRS determines how much money you earned, for which credits and deductions you qualify for, and how much your refund should be.

One form of identity theft is employment fraud. People commit identity fraud when they steal your SSN to work under your name. When you file your income tax returns, the IRS will see the thief’s fraudulent use of your number and assume that you underreported your income. This will result in a higher tax liability, reduction of refund, and ineligibility for some tax credits, along with penalty and interest payments.

Thankfully, there are several easy ways to protect yourself, such as never carrying your social security card on your person. Also, photocopy both sides of all of your ID’s, credit, and bank cards, so that if your purse or wallet is stolen, you can prove your identity to banks and the government. Keep these items in a safe, preferably locked, place in your home or office. Write, “Please see ID” on the back of all your credit and bank cards, too, to protect yourself. To avoid phishing scams, remember that the IRS contacts taxpayers only through postal mail and will never send you an email or call you. Keeping all of this information in mind can help you to retain greater security over not only your financial and credit identity, but also your life.

If you think you are a victim of identity theft, call your local police station to file a report. After that, contact your bank and credit card companies, with photocopies in hand, to freeze or place a fraud alert on your accounts. Also try to contact the three major credit reporting bureaus to alert them that someone stole your SSN and request that a fraud alert or freeze be placed on your information. A fraud alert notifies financial institutions that someone may try to fraudulently use your SSN, whereas a freeze disallows any action taken under your SSN. When you have a fraud alert in effect, a business must call you at your home or work phone to verify any financial or credit action taken under your SSN.

Next, call the IRS Identity Protection Specialized Unit (800-908-4490) to let them know of your suspicions. Finally, contact the Federal Trade Commission at 877-ID-THEFT; the FTC records all identity theft complaints so the issue can be monitored at the national level. Please note that action taken by the IRS and the FTC may take a considerable amount of time, so the faster you act, the faster you can get your life back.

If you are facing IRS or tax-specific identity theft problems, contact the Taxpayer Advocate Service (877-777-4778). The Taxpayer Advocate Service is designed to help analyze your tax issues and act as a go-between for you and the IRS. Always open all communication from the IRS and respond to it quickly.

Identity theft is a terrible crime, but knowing how to protect yourself and how to limit damage after an attack is the most important tool in the battle over you.

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