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TurboTax / Tax Calculators & Tips / All Tax Guides / General Tax Tips / Identity Theft: 7 Steps to Reclaiming Your Identity and Keeping it Safe

Identity Theft: 7 Steps to Reclaiming Your Identity and Keeping it Safe

Updated for Tax Year 2016


OVERVIEW

As more personal information continues to be stored online, the risk of identity theft also increases. In 2014 alone, the Bureau of Justice reported that 17.6 million U.S. residents experienced identity theft. If someone uses your personal data pretending to be you, it's a serious crime. With quick, decisive action, you can help discover the fraud, stop further damage and reclaim your identity. Here are six steps to get you on your way.


#1. File a fraud alert with a credit reporting company

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Contact one of the three major credit reporting companies to place an initial fraud alert including:

It doesn't cost anything to place a fraud alert on your credit report. The reporting company you initially call will contact the other two. Each agency will send you a letter confirming the fraud alert. The initial fraud alert lasts 90 days and prevents a stranger from obtaining credit in your name.

#2. File an FTC fraud complaint and a police report

File an identity theft complaint with the Federal Trade Commission (FTC) by phone or online, and you should do this quickly. Filing online is faster because once you fill out the complaint form — swearing in writing that everything you are stating is true — you can immediately print a copy of the complaint. This is termed an Identity Theft Affidavit.

  • Take the completed FTC Identity Theft Affidavit to a police station to file a written report
  • Obtain a copy of the police report and staple your Identity Theft Affidavit to it

The combined documents are considered an Identity Theft Report and having the affidavit makes it easier to get the police report quickly.

#3. Report false tax returns filed in your name

If you receive a notice from the Internal Revenue Service (IRS) that two tax returns have been filed in your name, your e-filed tax return gets rejected, or have any other reason to suspect your tax identity has been used fraudulently, call the number on the IRS notice, contact the IRS Identity Protection Specialized Unit at 800-908-4490, and fill out IRS Identity Theft Affidavit, Form 14039.

#4. Obtain and review your credit reports

Obtain copies of your credit report from each of the three credit reporting companies. Everyone is entitled to one, free annual credit report, but don't worry if you've ordered a report recently. Identity theft victims can get free reports without waiting a year from the last one.

  • Use your Identity Theft Report to prove your status as a victim of theft
  • Review the three credit company's reports carefully
  • Look for any transactions or activities that you don't recognize

#5. Deal with each account affected by the fraud

Once you have identified the accounts affected by the identity theft, tackle them one by one.

  • Close any new accounts opened in your name; contact the fraud departments for those accounts (i.e. the bank that issued the card) and submit a fraud report
  • For existing accounts you want to keep, contact their fraud departments and dispute the fraudulent charges
  • Follow up with a letter and a copy of your FTC Identity Theft Report which includes a copy of the police report to each account issuer
    • Send by certified mail to ensure they are received
  • After confirming the charges are cleared, or the account has been closed in your favor, use those confirmations to correct your credit reports
    • Contact the credit bureaus and ask them to remove the accounts you’ve closed
    • It’s important to wait until the account holders have cleared the fraud in your name before contacting the credit bureaus, otherwise, they will reject your requests to remove them from your credit history

#6. Keep your identity safe from tax scams

Keep up on the latest identity theft scams so you'll be prepared if they try one on you again. For example, lots of taxpayers have received phone calls from people claiming to be IRS agents who insist they provide personal information and/or cash.

This happened to Presley Wiseman, a writer living in South Lake Tahoe, California. "The guy said that an arrest warrant had been issued in my name but that I could avoid arrest if I confirmed my Social Security number and coughed up $1,000," Wiseman says. "I asked for his phone number, then decided not to call back."

These types of information-gathering scams can also work via email. Your best bet for keeping your identity safe in the future is to refuse to respond to any online requests for personal information that claim to come from the IRS, since the IRS doesn't operate that way.

#7. Continue to monitor your accounts

Once an identity has been stolen, it can be sold online repeatedly on the black market to thieves who each might commit a different kind of fraud with the information. One thief might use the information for tax return fraud, while another might use it to open fraudulent credit card accounts and these may not occur in the same month or in the same year. It's important after you have reclaimed your identity to continue to monitor for additional misuse. To catch identity thieves quickly, monitor your accounts for unauthorized activity. Be sure to check:

  • Bank and investment accounts
  • Medical records
  • Credit reports every month or so

Carefully review any IRS letters you receive in case someone has fraudulently filed a tax return in your name or has earned income by claiming your identity. A bill collector claiming a debt you know nothing about is also a red flag.

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The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.


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