File your tax return as early as possible to prevent refund fraud

Tax season is officially here. And filing your tax return early is a great idea, especially if you’re getting a refund. But here’s another important reason why you may 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. Any refund they claim is sent directly to them. Don’t think it can happen to you? Think again: In recent years, the Internal Revenue Service has paid out billions 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 in this year’s tax season.

If you have ever been a victim of identity theft, you’ll know that it can take months — even years — to fully sort out. The same is true with 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 the criminal files a return with your personal information before you do. If they do afterwards, their request will be automatically denied. As a result, the more quickly you file your return, the less chance you have of becoming a victim of refund fraud.

You may not have all your paperwork needed to file your tax return right now. If this is the case, just prepare as much as you can so when those final required pieces of documentation arrive, you are ready. Even if you owe money to the IRS, experts recommend you still file early. Even if you file early, you don’t have to pay the IRS early — you can wait until April 18 deadline.

Don’t forget some practical tips for reducing refund fraud. Make sure to limit whom you release your personal information to, and know that the IRS usually doesn’t initiate contact with taxpayers by phone or email. If you are ever in doubt about correspondence you receive from someone claiming to be from the IRS, call the IRS by phone for verification at 1-800-829-1040.

The IRS provides additional tips on how to prevent identity theft and refund fraud as well as information on what to do if you feel you are a victim of refund fraud.