How To Prevent A False Tax Return In Your Name

by | | Taxes

Having a false tax return filed in your name delays your refund and costs you time and energy. Here’s how to prevent this quickly and easily.

Background

Someone who has your SSN can file a false tax return and claim a refund fraudulently. This is called taxpayer identity theft.

Consequences

A false return will delay your refund and cost you time and energy.

Delayed refund

With a false return in, you can’t e-file your own legitimate return. Instead, you must snail mail a paper return. The IRS takes FOREVER to process paper.

Filing on paper delays your refund for several months, even without a false return out there. Now add even more time for the IRS to confirm your refund claim is legit.

Time and energy

You’ll need to complete IRS Form 14039, Identity Theft Affidavit and mail it in with your return, plus deal with future IRS correspondence on this matter. Here is the full IRS Taxpayer Guide to Identity Theft.

How To Prevent

There are two ways to prevent a false tax return: file early and use an identity protection PIN.

File Early

File your legit return early and beat the bad guys to it. The IRS usually starts accepting returns in late January to mid-February. Extra incentive to keep your tax records organized instead of scrambling in April!

Use An Identity Protection PIN

Obtain an identity protection PIN (IP PIN) to shut out the bad guys altogether. If an IP PIN exists for you, no one can file a return without it. Use a federal IP PIN; your state may offer an IP PIN too.

Federal IP PIN

Get your federal IP PIN from the IRS IP PIN tool. Your spouse should get one too. The tool is available mid-January to mid-November each year.

Once you’ve obtained an IP PIN, the IRS generates a new one every year, and you can’t file without it. Log back into the tool after mid-January to get your new PIN.

Real-world tip: IP PINs are issued for a calendar year, not a tax year. The confirmation message says, “Congratulations, your 2022 Identity Protection PIN is XXXXXX.” It doesn’t say “… your tax year 2022 IP PIN is XXXXXX.”

This means you use your 2022 IP PIN for any return you file in calendar year 2022. This includes tax year 2021 and prior years.

No, you don’t use your 2021 IP PIN to file your tax year 2021 return, because you’re filing in calendar year 2022. Not even Question 11 of the IRS IP PIN FAQs is crystal clear on this point. I tried my 2021 IP PIN on my tax year 2021 return, and got summarily rejected.

State IP PIN

Some states now offer an IP PIN. Google “[your state] identity protection PIN” to check.

If you’d like to make sure you’re saving tax wherever possible and avoid surprises on April 15th, schedule a FREE Financial Pulse Assessment™. This is a 3-step process to get clarity on your finances and “test drive” our services.

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