7 signs someone may have stolen your identity for a tax refund

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7 signs someone may have stolen your identity for a tax refund

Tax-related identity fraud is a significant threat. In 2023 alone, the IRS flagged a whopping 1.1 million tax returns for potential fraudulent activity, stopping over $105.3 million in illegal returns. Unfortunately, for many, identity theft is a reality.

With an aging population, limited digital literacy, and plenty of access to personal details via the web, criminals can seek out Social Security information and e-file for tax returns. They may even do so early in the season to get ahead.

PeopleFinders looks at how this scam works, the signs that someone has already filed taxes using your identity, and what to do if it happens to you — or simply to protect yourself.

Why Might Scammers File Taxes in Your Name?

Tax-related identity theft is when someone uses your personal information, particularly your Social Security Number (SSN), to file tax-related paperwork using your identity. It’s usually done to file a tax return and collect the money by directing it to a bank account they control.

This usually happens early on in the tax season, so the rightful SSN owners have the second tax filing, making them more likely to be flagged as fraudulent.

7 Warning Signs Someone Has Already Filed Taxes Using Your Identity

These are the signs to look out for if you suspect you’ve fallen victim to tax-related fraud.

1. Your tax return can’t be filed because your SSN was already used

When you try to e-file your tax return, you’ll receive an error that your Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) has already been used to file once. This is the first sign someone has stolen your identity and is flagged by the IRS as fraudulent activity.

2. You receive IRS letters asking for identity verification

If the IRS detects unusual activity or potential identity theft, it sends you an identity verification letter 5071C, 4883C, or 5747C.

5071C is the Potential Identity Theft with Online Option letter: It asks you to verify your identity through an online tool.
4883C is the Potential Identity Theft letter: It asks you to call the IRS to verify your identity.
5747C is the Potential Identity Theft In-Person Appointment letter: It asks you to verify your identity in person in a local Taxpayer Assistance Center.

3. Your IRS records show tax activity you don’t recognize

If you check your online IRS account and find activity you didn’t personally initiate or authorize, such as a return you didn’t submit, a status change on a refund you didn’t file for, or a notice about changes to an online account created under your name, this is a major red flag.

4. An unexpected tax refund you didn’t file for is issued to an account you don’t control

If you get notified of a tax refund that was deposited into a bank account or prepaid card you don’t control, you likely had your identity stolen.

5. IRS records show income you haven’t earned from unknown employers

If your tax transcripts, wage records (like W-2s), or other IRS documentation show income from employers you’ve never worked for, this is a sign someone used your SSN to fake employment or earning records. You can owe taxes on this income.

6. Collection agencies contact you about taxes, penalties, or interest you owe on returns you never filed

If you haven’t filed a tax return but received a notice you owe taxes, interest, or penalties, it means the identity thief continuously uses your identity to submit returns, holding you liable if you don’t pay.

7. Your IRS mailing information has changed, or you’ve stopped receiving mail from the IRS completely

An IRS Identity Protection Personal Identification Number (IP PIN) is a six-digit number you create to prevent identity theft using your SSN. You can receive a notice that an IP PIN has been created without your knowledge, or even stop receiving mail from the IRS completely if the thief changes your mailing information.

What to Do if You Experience Tax-Related Identity Theft

Here’s a step-by-step guide to follow if you suspect, or are sure, your identity has been stolen by a tax return thief.

1. Respond to the IRS notices you receive

As mentioned above, the IRS sends you letters or notices if it suspects fraudulent activity on your account. If you receive any letter from the IRS, don’t ignore it and follow the instructions in it after confirming the letter is legitimate.

As a rule of thumb, the IRS will never initiate contact by phone, email, text, or social media messages. Any notice you receive will be sent by physical mail and will include proper letter numbers.

2. Report the issue with the IRS directly

The IRS has an Identity Protection Specialized Unit you can call on 800-908-4490. You can also contact the IRS through the information printed on the letter you receive and describe your problem to them.

3. Consider filing an Identity Theft Affidavit (Form 14039)

If you haven’t been contacted by the IRS but suspect unusual activity on your account that matches the aforementioned signs, you can file Form 14039 online or print and mail it to the IRS.

Once the IRS receives the form, it will mark your account with an identity theft indicator, start the process to resolve the fraudulent filings, and issue you an IP PIN to protect your account from future attacks.

4. File your taxes normally

Don’t hesitate to file your taxes on time, even during the legal process of resolving the tax-related identity theft. Even if your e-file is rejected because your SSN was stolen, you should file manually and attach Form 14039 to your paper filing.

5. Take further identity-theft reporting actions

We strongly recommend that you take broader actions to report the identity theft you experienced. If someone has your SSN and enough information to file for taxes in your stead, they can steal your identity and commit more crimes you’ll be liable for.

Report the incident at IdentityTheft.gov (the FTC’s portal for recovery steps).
Contact the three major credit bureaus to place a fraud alert or credit freeze.
Contact the Social Security Administration to report SSN misuse.
File a police report to help if financial disputes arise.

What Steps Can I Take to Protect Myself?

Here are a few important steps you can take to prevent tax-related identity theft.

Create your own Identity Protection Personal Identification Number (IP PIN): It confirms your identity and prevents thieves from e-filing using your SSN.
File your tax returns early: Don’t wait till the last minute, and beat the criminals to filing for returns.
Keep your SSN information secure: Don’t carry around your SS card, shred your old tax papers before discarding them, and store your important papers securely in your home. Don’t respond to emails, text or social media messages, or calls pretending to be from the IRS asking for your SSN or other critical personal information.
Monitor your IRS account: Create an online account if you don’t have one and keep a close eye on it.
Know what information is available about you or your employer online: Use a reliable people search tool to look up public records. This way, you can see what’s out there and control what is shared about you, monitoring the roads that might lead an identity thief to your information.

Final Thoughts

Tax-related identity fraud isn’t a rare occurrence, so it’s crucial to be aware of the signs to protect yourself and the people around you from being targeted.

Keep an eye out for any unusual activity on your account, be proactive about setting up an IP PIN, don’t respond to scammers who might request your information online or via text, and share this with anyone who might benefit from it.

This story was produced by PeopleFinders and reviewed and distributed by Stacker.