Child Identity Theft and Tax Fraud: What You Need to Know
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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:
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?
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