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Tax Identity Theft Explained

Tax Identity Theft Explained

When people think of identity theft, they often think of it as one type of crime. However, there are several ways a criminal can use your information that goes beyond financial ruin.

For instance, they can apply for government benefits, receive medical care or prescription drugs, apply for a job using your social insurance number, and so on.

When it comes to doing your taxes, it is important to be aware of another fraudulent crime that doesn’t involve stealing your bank information – tax identity theft.

Tax identity theft occurs when someone uses your personal information to file a tax return in your name. In doing so, the criminal adjusts the numbers, enters an unrelated refund dispersal option like a prepaid debit card, and runs off with your money.

Of course, all of this happens before you even have a chance to realize something has gone wrong.

How do they get your information?

There are a variety of ways scammers can get their hands on your personal information that includes but is not limited to, the following:

  • Data breaches
  • Lost or stolen Social Security Number
  • Stolen mail (Hold your mail while you are on vacation!)
  • Corrupt tax preparation services
  • Imposter scams (People pretending to be the CRA, for example.)

Protect yourself from Tax Identity Theft.

The list of dos and don’ts to protect yourself against identity theft can get pretty lengthy. However, for tax identity theft, the list becomes a little more focused.

  1. Never provide personal information by email. The CRA will not ask you for personal details through the internet.
  2. Keep all passwords, access codes, and PINs a secret.
  3. Before supporting a charity, check with the CRA to find out if the charity is registered.
  4. Keep your SIN in a safe place. Remember, this is never used as a regular piece of identification, so there is no need to keep it in your wallet.
  5. Shred all unwanted documents or keep them in a safe place.
  6. Immediately report lost or stolen credit or debit cards

Lastly, and most importantly, you can monitor your tax accounts by registering for My Account or My Business Account, which allows you to set up notifications that will alert you if there are any changes made to your account. Meanwhile, always choose your tax preparer carefully! Trust is paramount and there is no shame in checking their references.

Remember, if you or someone you know thinks they are a victim of a scam, report it immediately.

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