Finance Blog
Child Identity Theft and Tax Fraud: What You Need to Know
How can child identity theft involve tax fraud?
Identity theft occurs when someone, without your permission, uses your or your child’s personal information such as name, Social Security number, or other identifier to commit fraud or other crimes.
Identity theft, and child identity theft in particular, can cause a host of problems in the credit and financial worlds. One growing concern is government document fraud, including tax fraud.
A thief can take a stolen Social Security number and create a fraudulent tax return with a false employer and income. A thief can also use stolen Social Security numbers to falsely claim children as dependents on his or her own tax return in attempt to get the Earned Income Tax Credit or other credits.
Identity thieves often attempt to submit a fraudulent tax refund early in the filing season. Once the thief receives the refund check, he or she can quickly turn it into cash at a check-cashing store. When the identity theft victim goes to file taxes, the IRS assumes that the taxes were already filed and that the victim has already received both the tax credits and refund.
A thief can even look up the names and Social Security numbers of recently deceased children in the Social Security Death Master File. The thief then can claim those children as dependents on his or her fraudulent tax returns. When the parent files a tax return claiming the child as a dependent in the year that the child died, he or she is unable to do so, piling injustice on top of grief.
Uncovering tax-related identity theft
You usually won’t even realize you are victim of tax-related identity theft until you get a notice from the IRS. That notice might tell you that someone has already filed using your, or your child’s, Social Security number.
The IRS also might say that:
- More than one tax return was filed in your name.
- Your children were already claimed as dependents on a different tax return.
- You have a balance due or a refund offset, or you have had collection actions taken against you for a year in which you did not file a tax return.
- You received wages from an employer for which you have not worked.
How to respond to tax identity theft
If you receive a notice from the IRS, open it and respond immediately to the name, address, or phone number on the notice. Often, people see a letter from the IRS and get nervous about it, so they delay opening it, an IRS spokesperson says.
If you have lost personal information or had it stolen from you and you think you are at risk of identity theft, contact the IRS immediately so it can secure your tax account. Call the IRS’s Identity Protection Specialized Unit toll-free at 1-800-908-4490 or visit irs.gov/identitytheft. You will also need to fill out the IRS Identity Theft Affidavit, Form 14039; follow the instructions provided on the form.
If you have an unresolved issue related to identity theft, or if you have suffered a significant hardship as a result of the administration of the tax laws, you can also contact the IRS Taxpayer Advocate Service.
How can you minimize the chance of becoming an identity theft victim?
- Don’t carry your Social Security card or any document with your Social Security number on it. Only disclose your Social Security number to a business when it is required.
- Protect your financial information.
- Check your credit report every 12 months.
- Secure personal information in your home.
- Protect your personal computers by using firewalls, installing anti-spam/virus software, updating security patches, and changing passwords for Internet accounts.
- Don’t give personal information over the phone, through the mail, or on the Internet unless you have initiated the contact or you are sure you know with whom you are dealing.
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yes i would like to know how to stop my child ssi number used with out me knowing
Latonia, The best way to protect your child’s social security number is to only give it out to those who need it. If your child is the victim of identity theft, follow these tips on what to do next: http://blog.equifax.com/credit/what-to-do-if-your-child-is-a-victim-of-identity-theft/
I hope this helps and thanks for posting.
My kids socials were used by someone on their tax return. As soon as I found out I went to the IRS and filed identity theft and turned in my return because I could not e file. The irs agent attached copies of my kids socials and birthcertificates. How long does this kind of thing take to get fixed and for me to receive my tax refund? I need the money really bad..
Oh no! It’s good that you caught it and it sounds like you have already taken the necessary steps to get it resolved. The agent at the IRS would know best the time frame for amending the tax returns, and new tax laws are creating some delays at the IRS. If you get an update from the IRS agent about the timeline, would you mind posting it here? It sounds like it’s an issue facing a few people. Thanks.
Dependent fraud. .. my kids were used on someone’s tax return. How long does it take for something like this to get fixed?
Jennifer, I’m sorry to hear that. The IRS is facing delays in processing returns due to new tax forms so it’s hard to say how long it’ll take to correct the associated tax returns. Be sure to let the IRS know right away, and an agent there should give you a time frame. It sounds like a few people are facing the same issue (see above comment). If you could share with us what you learn, I’m sure other parents would appreciate it. Thanks for posting.
the IRS sucks. They are the most incompetent government agency that exists. My daughter’s ssn was compromised in 2010; someone filed using her number. I did EVERYTHING the IRS asked. In 2011, both mine and my daughters was used. Again, did everything the IRS asked. They finally labeled my SSN as a victim of identity theft (which took roughly 11 months to do) and sent me a “special” pin to efile. Oh, but guess what? They can’t do anything to protect my daughter’s SSN because she is under 18. So by the time the IRS issued my pin and I could file, my daughter’s social was already used. In just about 3 years the IRS has done nothing to PREVENT this or try to go after who did this. I wish I could come up with more descriptive words about how much the IRS sucks and what a waste of tax payer money – but I will stick with they SUCK. I mean poor excuse for a government agency (and I work for the government).
Had the same issue, someone used my son’s in 2010, we did everything they said to do, they finally issued him a pin this year, a month later they sent a letter of intent to seize property for the refund which the thief got. they are re-investigating. The person on the phone didn’t want to admit they had two tax forms and that he could see we sent in all of the proper forms. What a joke.