How to prevent tax fraud

Tax season is a common time of year for scammers to prey on consumers. Even though the IRS recommends intervention within 120 days, victims wait an average of 556 days before their case is resolved, according to the National Taxpayer Advocate's 2023 report to Congress,

You can take steps to protect your personal information and help prevent becoming the victim of tax fraud.

A scam artist can file a fake tax return with just your name, birth date and Social Security number.

It can be difficult to know if you've become the victim of a tax fraud: In fact, you may only find out when you go to file your return and it's rejected.

According to the IRS, some indications of unusual activity with your tax return include receiving a W-2 from an employer you didn't work for, getting an alert about unreported income or having your tax return rejected.

If you believe your Social Security number was used to file a fraudulent tax return, report it to the IRS by completing Form 14039.

There's no surefire way to prevent bad actors from getting ahold of your information, but identity theft monitoring services can alert you to potential danger and help you undo the damage and recover lost funds.

Sign up for identity theft protection

Aura has a family-friendly plan with parental controls, like the ability to limit screen time. It also comes with up to $5 million in identity theft insurance and will cover lost wages and child care.

IdentityForce® has identity restoration experts who can help cut through the red tape and paperwork to restore your good name. Its plans monitor thousands of websites, chat rooms, blogs and other sources and include up to $2 million in identity theft insurance.

Watch out for identity theft scams

Be careful about opening or responding to unsolicited emails and letters, which may be scammers trying to get your sensitive information.

These messages may claim to be warning you about suspicious activity or, if it's during tax season, that there's a problem with your return.

Some common signs of phishing scams include an outsized sense of authority or urgency. Look for misspellings, slightly unusual email addresses or generic greetings. Never click on links in emails or texts that you can't verify.

Have strong cybersecurity

With most tax returns filed online, it's increasingly important to make sure you have strong cybersecurity protection on your devices. The IRS recommends using programs with strong firewalls and anti-virus protections.

Bitdefender Antivirus Plus has real-time protection against viruses and other malware, provides a secure banking browser and 24/7 customer support.

Some identity theft plans offer credit monitoring, but you can also get it as a standalone service. The best credit monitoring services monitor all three credit bureaus, Experian, Equifax and TransUnion.

PrivacyGuard® has two plans with 24/7 credit monitoring and features like a credit-score simulator and a credit information hotline.

If you're worried about your identity being compromised, avoid sharing sensitive data on public WiFi, use virtual card numbers and turn on two-factor authentication for all passwords.

If you think you are the victim of a scammer, you can freeze your credit.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every credit monitoring article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of credit monitoring products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

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