Here’s another resolution for the new year: File your tax return as soon as possible.
TOOL: Calculate Your Share of the Tax Burden
We’re not simply anti-procrastination. We want you to get your money, and one of the surest ways to make sure you get your refund before an identity thief does is to file as soon as you can.
Once again this year, about 110 million taxpayers will request refunds from the IRS, but, if history is any guide, about 1 million filers might discover that someone else has already claimed their money with a phony tax return. That’s how many fraudulent returns in 2013 scored $5.8 billion in ill-gotten gains for the crooks who filed them. The honest taxpayers who came to the party late had to fight to prove the money was really theirs. According to the Treasury Department’s Inspector General for Tax Administration, it took an average of 278 days – more than nine months – for those cases to be resolved so the rightful owners got what they were due.
The IRS claims it stopped another 4.1 million phony returns in 2013, preventing almost $25 billion more in tax-refund fraud. (No one has any idea how much fraud went undetected.) But just before this past Christmas, it was disclosed that the tax agency accidentally paid nearly $50 million in refunds in 2013 on returns that had been flagged as potentially fraudulent. The computer program that was supposed to put the brakes on the refunds instead sent them merrily on their way to crooks’ bank accounts and debit cards.
The IRS says it’s gotten better at identifying phony returns, but it’s clear that a serious flaw remains in the system: The tax agency pays the vast majority of refunds long before it has a chance to check the information on the return against the W-2 income and withholding information provided by employers.
While the law says employees must get their W-2s by January 31, in most cases the information doesn’t get to the Social Security Administration until March 31 . . . and only after that is it passed on to the IRS. In the meantime, a fraudster with your name and matching Social Security number can make up wage and withholding data to claim a refund.
What does this mean to you?
You might want to root for the IRS to do a better job stopping the bad guys (and Congress has helped by ordering that, starting next year, employers must give W-2 data to the IRS a little earlier).
But on a more personal level, make a commitment to file your 2015 return as soon as you can. The IRS says it will begin accepting electronic returns on January 19 and start processing paper forms the same day.
Once you get your W-2, 1099s and any other information needed to complete your return, fire up the software or grab your pen to do it yourself, or schedule time with your accountant, enrolled agent or other preparer.
The sooner you file, the sooner you’ll get your money back . . . and the less likely a crook will beat you to it.
(Source: Tribune Content Agency)