According to the data from the Internal Revenue Service (IRS), over 88% of the 155 million tax returns in the U.S. were filed electronically last year. Due to the current coronavirus outbreak, it is expected that an even greater percentage of tax documents will be submitted online this year.
Unfortunately, with the lockdown forcing people to work remotely, cybercriminals have become more active than ever this tax season. People doing business online, especially accounting firms, are now prime targets for hackers looking to exploit any vulnerability.
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Whether you do taxes on your own or employ an accountant, protecting your personal documents should be a priority. Many people have lost hundreds or even thousands of dollars and had their personal data stolen through tax scams. It is vitally important to take security into consideration when going about this annual taxpayer duty.
I offer three basic tips on how to avoid tax filing risks online.
1. Don’t fall for a phishing scam
Phishing is an attempt to steal confidential data from internet users through impersonation. This criminal technique is most often used in emails and text messages. According to the FTC, the imposter scam is the number one type of fraud in the US, costing Americans more than $666 million last year alone. To avoid having your money or identity stolen through phishing, remember this:
- Never click on links you receive in emails, text messages, or social media posts claiming to be from the IRS. The IRS does not ask for personal or financial information from taxpayers through these channels.
- Never send your personal information to any “official” or “representative” by email or a text message.
- When in doubt, before doing anything, contact your bank to check the legitimacy of the required actions. Don’t forget that banks, like the IRS, never ask for your personal information by phone or email.
2. Use a VPN when connecting to your online accounts
As a rule of thumb, never file taxes, submit any personal information online, or log in to your bank accounts over public Wi-Fi. If there’s no other choice, you should use a reliable VPN service like NordVPN to protect your connection. VPNs (virtual private networks) replace your IP address with a virtual one that fraudsters cannot trace back to you and your data.
But the risks aren’t limited to just public networks. Even your home Wi-Fi may be breached by skilled hackers, so you should always use a VPN to keep your information private. At the moment, employees all over the world are using secure VPN connections to safely access their company accounts during the lockdown.
3. Encrypt your tax forms and bills
If you're sending your files to someone, make sure to encrypt them first. Tax documents can give away a lot of personally identifiable information, which is why they should never be left unencrypted on your computer or in the cloud. Use file encryption tools to easily encrypt any valuable information.
The IRS requires taxpayers to store all documents used for tax credits or deductions for three years. Luckily, they accept digital copies, so you don't have to worry about blurry receipts or digging through piles of paper — simply keep your tax return documents, including photocopies of receipts, in a private encrypted folder.
Cyberattacks may be on the rise, but they don't have to necessarily happen to you. As a taxpayer, you can easily protect your sensitive data with the tools designed for that purpose. Adopting these practices for your online tax returns will also help you watch out for other online threats.