Prevent Tax Time Identity Theft

Some thieves are eager to get their hands on your tax refund.

ByABC News via logo
March 16, 2008, 5:46 PM

March 17, 2008 — -- Tax time is a stressful time for many Americans as they prepare to count every deduction and balance the books by the ever-looming April 15. But with the digital age has come an additional concern identity theft.

Brazen thieves are not only targeting people's identities and good names, but also their tax refunds.

By filing a phony return with your name and social security number on it, the crooks are able to get your refund. In fact, the Federal Trade Commission received more than 20,000 complaints about this kind of identity theft last year.

There are ways to protect yourself and your money. "GMA" contributor Wendy Bounds gives you advice on what to do and what to look out for.

Many people prepare their taxes with an online program, or e-mail information to their accountants. So, you really need to pay attention to security on your computer.

Don't use obvious passwords like your birth date, mother's maiden name or social security number, and don't save it in your Web browser when accessing banks. It could get leaked if you get a virus or are hacked. Also, install the latest updates to your operating system so that known Windows or Mac vulnerabilities can't be exploited by hackers.

You should password-protect all tax returns that you print to PDF from your tax software in order to keep your social security number secure.

Also, don't e-mail tax documents to your accountant unless they are encrypted to prevent anyone snooping on your network from gaining access to your financial information.

If you're downloading IRS W2 forms, 1099s, and other personal tax documents from your employer, make sure you create a strong password when registering to download them so it is not easily guessed by strangers.

You have to be careful offline, too, and that means covering your paper trail. Shred financial documents and paperwork with personal information before discarding them. Keep them tucked away if you employ outside help or are having work done on your house.