Safeguarding Your Refund: Identity Protection and Verification Tips

Why protecting your refund matters

Tax-related identity theft occurs when someone uses your personal information to file a fraudulent tax return and claim your refund. This can delay your legitimate refund, create years of tax-account problems, and lead to financial loss and a stressful recovery process. The IRS and consumer agencies strongly recommend preventive steps and provide dedicated tools (IRS Identity Theft Central, IP PINs, and Form 14039) to help taxpayers protect and restore their accounts (see IRS: Taxpayer Identity Theft).

This guide gives prioritized, practical steps you can use immediately, a clear action plan if you suspect fraud, and links to specialized FinHelp articles for deeper help.

Practical prevention steps you can implement today

1. Get an IRS Identity Protection PIN (IP PIN)

• What it is: An IP PIN is a six-digit number the IRS issues to confirmed identity-theft victims and to eligible taxpayers through the IRS’ IP PIN tool. It prevents someone else from filing a return using your Social Security number because the IRS won’t accept e-filed returns without the correct PIN.
• Why use it: An IP PIN is one of the most effective tax-season protections available. Apply through the IRS “Get an IP PIN” tool or follow guidance if you’ve already received IRS identity notifications (IRS: Identity Protection PIN).

1. File early and electronically with direct deposit

• Filing early reduces the window in which a fraudster can file a return in your name. E-filing with direct deposit is faster and more secure than mailing a paper return.

1. Use reputable tax-preparation software or a credentialed tax pro

• Choose software with strong encryption, two-factor authentication, and a clear privacy policy. If using a paid preparer, verify credentials (PTIN, CAF number or EA/CPA/Attorney) and use secure portals for document exchange.

1. Lock or freeze your credit and set fraud alerts

• A credit freeze prevents new credit accounts from being opened in your name; a fraud alert makes institutions take extra steps to verify identity. Both are free under federal law and can deter criminals from using your identity to open accounts that support tax fraud.

1. Monitor credit reports and IRS account activity

• Review free annual credit reports and consider credit-monitoring alerts. Check your IRS account online (if enrolled) for suspicious notices, and review wage and income information using IRS transcripts when necessary.

1. Secure personal records and digital accounts

• Store tax records in a locked physical location or encrypted digital storage. Shred paper with personal data before disposal. Use strong, unique passwords and a password manager; enable two-factor authentication (2FA) on email, financial accounts, and your tax software.

1. Limit sharing of Social Security numbers and sensitive data

• Only provide your SSN when legally required, and confirm the identity of any requester (for example, call the organization using a number from an official website, not a link in an email).

1. Use secure connections

• Avoid public Wi-Fi when accessing tax or financial accounts. If you must use public networks, use a reputable VPN.

1. Watch for scams and phishing

• The IRS will not initiate contact by email, text messages, or social media asking for personal or financial information. Be skeptical of urgent-sounding messages and unsolicited calls about tax refunds. Verify suspicious contacts through IRS.gov before acting.

If you suspect your tax return was filed fraudulently: a step-by-step response

1. Don’t ignore IRS notices

• If the IRS sends a letter saying multiple returns were filed under your SSN or that wages are reported you don’t recognize, respond promptly. Many IRS identity-theft pathways start with a mailed notice.

1. File IRS Form 14039 (Identity Theft Affidavit)

• Use Form 14039 to report that someone used your information for tax-related identity theft. The form is the IRS’ official record for initiating identity-theft handling. See the IRS identity-theft guidance for the latest submission details (IRS: Taxpayer Identity Theft).

1. Apply for or confirm your IP PIN

• If you do not already have one, request an IP PIN to prevent future fraudulent filings. If you already have an IP PIN and suspect compromise, follow IRS directions to recover it.

1. Report the theft to the FTC and local authorities

• File a report at IdentityTheft.gov (FTC). Create an identity-theft recovery plan through that site and follow its step-by-step checklist (FTC: IdentityTheft.gov).

1. Place fraud alerts or credit freezes with the three credit bureaus

• Equifax, Experian, and TransUnion can add an alert or freeze to your credit file. This can slow a thief from opening accounts that could be used in tax fraud or to otherwise impersonate you.

1. Contact banks and financial institutions

• Inform your bank and any affected institutions so they can flag suspicious activity, reissue cards, or close compromised accounts.

1. Keep detailed records

• Save copies of all forms (Form 14039, police reports, FTC reports), correspondence with the IRS, and dates/times of phone calls. These records help resolve disputes and expedite recovery.

1. Follow FinHelp recovery resources

• For a practical recovery checklist and timelines, see FinHelp’s article, “Protecting Your Refund from Identity Theft: Detection and Recovery Steps” which walks through common recovery scenarios and expected IRS processing timelines.
• Internal link: Protecting Your Refund from Identity Theft: Detection and Recovery Steps (https://finhelp.io/glossary/protecting-your-refund-from-identity-theft-detection-and-recovery-steps/)

Verification practices to reduce fraud risk when working with others

• Vet preparers and third parties: Confirm a tax preparer’s PTIN and professional credentials and insist on secure portals for file exchange. If a preparer resists e-signatures or secure upload, treat that as a red flag.
• Require multi-factor authentication: Insist that tax-providers and financial accounts use 2FA for account access and administrative changes.
• Confirm account ownership before sending refunds: If a preparer requests a third-party bank account for direct deposit, verify the account holder and consider having refunds sent to your own bank account.

Common misconceptions and pitfalls

• “I’m too young/old/rich/poor to be targeted.” Identity thieves target a broad cross-section; perpetrators look for easy or lucrative opportunities, and seniors, children, and new taxpayers are all common victims.
• “Once I report it the IRS fixes everything quickly.” Reality: the IRS and credit bureaus can take weeks to months to complete investigations. Acting quickly and documenting everything shortens resolution time.
• “Prepaid debit cards are safer for refunds.” Prepaid cards add complexity and often offer weaker fraud protections; a deposit to your bank account is generally safer and faster.

Professional insights from practice

In my years advising clients and handling tax-account recoveries I’ve seen three actions that consistently prevent headaches:

1. File early and enroll in an IP PIN when you can. Filing before a fraudster reduces the chance they beat you to your refund.
2. Secure email and document portals matter. Several clients avoided breaches because their preparer required secure logins and 2FA.
3. Maintain a simple, repeatable record-retention routine. A dedicated encrypted folder with prior-year returns, W-2s, and proof of identity saves time during recovery.

Helpful authoritative resources

• IRS — Taxpayer Identity Theft: https://www.irs.gov/newsroom/taxpayer-identity-theft
• IRS — Get an IP PIN: https://www.irs.gov/identity-theft-fraud-scams/get-an-identity-protection-pin
• FTC / IdentityTheft.gov: https://www.identitytheft.gov/
• CFPB — consumer guidance on identity theft and taxes: https://www.consumerfinance.gov/

For tailored recovery steps after receiving an IRS identity-theft notice, FinHelp’s page “What to Do If You Receive a Notice of Identity Theft from the IRS” explains how to interpret IRS letters and file the appropriate forms.

• Internal link: What to Do If You Receive a Notice of Identity Theft from the IRS (https://finhelp.io/glossary/what-to-do-if-you-receive-a-notice-of-identity-theft-from-the-irs/)

For background on the IRS’ IP PIN program and how to request or manage your PIN, see our dedicated glossary entry:

• Internal link: IRS Identity Theft Protection PIN (https://finhelp.io/glossary/irs-identity-theft-protection-pin/)

Final checklist: 10 quick actions

1. Consider applying for an IP PIN.
2. File your return early and e-file with direct deposit.
3. Use a secure tax preparer or trusted software with 2FA.
4. Enable 2FA on your email and financial accounts.
5. Freeze your credit or set fraud alerts if concerned.
6. Shred sensitive tax documents and use encrypted digital storage.
7. Avoid clicking links in unsolicited emails; verify via official sites.
8. Check credit reports and IRS account notices regularly.
9. If you receive suspicious IRS mail, file Form 14039 and follow FinHelp’s recovery steps.
10. Keep organized records of all communications and filings.

Professional disclaimer: This content is educational and not individualized tax or legal advice. For personal guidance, consult a qualified tax professional, CPA, or attorney. The IRS, CFPB, and FTC links above are authoritative resources; follow their instructions for reporting and recovery.

(Author note: For step-by-step recovery timelines and examples drawn from casework, see our articles linked above. These resources reflect IRS and FTC guidance current as of 2025.)