Filing tax returns early can help prevent refund fraud

Filing your tax return early is a great idea, especially if you’re getting a refund. You’ll get your money faster. But here’s another important reason you might want to file as early as possible: refund fraud.

Refund fraud is a type of identity theft that happens when a criminal uses your Social Security number and other personal information to file a fraudulent tax return before you file a legitimate return. Any refund they claim on your behalf is sent directly to their address. Sounds pretty crazy doesn’t it? It’s a fast-growing type of tax-season crime.

Don’t think it can happen to you? Think again: In recent years, the Internal Revenue Service has paid out billions of dollars in refunds later discovered to be fraudulent. The IRS is working to make it more difficult for criminals to participate in refund fraud. But it’s still expected to be a major problem this year.

If you’ve ever been a victim of identity theft, you know it can take months—even years—to fully sort out the crime. The same is true for refund fraud. You must wait while the IRS investigates your situation and for your real return to be filed and your real refund paid. Refund fraud only works, however, if criminals file a return with your personal information before you do. If they file afterward, their request automatically will be denied. That means the more quickly you file your return, the less of a chance you have of becoming a refund-fraud victim.

Right now, you might be waiting on all the paperwork you’ll need to file your tax return. If that’s the case, just prepare as much as you can. When those final required pieces of documentation arrive, you will be ready. Experts recommend filing early even in cases where taxpayers owe money to the IRS. Filing early doesn’t mean you have to pay the IRS early; if needed, you can wait until the deadline to make any payments.

We also would like to share some other important tax time tips. First, make sure to limit sharing of your personal information. Second, be skeptical of any contact you have by phone or email with someone claiming to represent the IRS. That’s because the IRS doesn’t initiate contact with taxpayers by e-mail, text messages or social media channels to request personal or financial information. The IRS initiates most contacts through regular mail delivered by the United States Postal Service. Not sure if the IRS is trying to contact you? Call the agency by phone for verification at 1-800-829-1040.

If you’re visiting an accountant, make sure you have compiled all of the necessary documents he or she will need to prepare your return in an organized folder. If you are preparing your tax return yourself, file electronically like an accountant would. The IRS processes electronic returns faster than paper ones, you can expect to get your refund 3 to 6 weeks earlier. Even if you’re not expecting a refund, filing electronically is still the way to go. Less than 1 percent of electronic returns have errors, compared with 20 percent of paper returns.