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One of the recommendations to avoid tax return fraud/identity theft is to file your taxes as early as possible:

It seems to me that you will never beat a fraudster at their own game.

  • You are concerned with the accuracy of your return. A fraudster just wants to get the maximum refund.
  • You have to wait for documents to arrive, e.g. from your employer, bank, brokerage, and dependent's day care provider. The fraudster just needs a W-2.
  • You have a day job and family responsibilities. Defrauding you and the IRS is the scammer's day job.

It seems to me that you can never file your taxes faster or sooner than a fraudster. So, how is this advice useful?

Nathan Smith
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stannius
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3 Answers3

29

I agree, it is not a great suggestion.

The idea for it comes from the fact that a tax return can only be e-filed for an individual once. If a second tax return is attempted to be e-filed, it will come back with an error. Obviously, if you file your return earlier rather than later, it closes the window of when a fraudster can e-file a fake return for you.

However, as you said, there are lots of reasons why you should not file the return before you are really ready.

If the fraudulent return does get filed before you get around to your real one, it's not the end of the world. When you try to e-file yours, you will get an error that a tax return has already been filed for you. That will be your indication that there was a problem. The IRS knows that this happens a lot, so if you contact them and explain the problem, they will tell you what to do. (It will probably involve mailing in your tax return along with IRS Form 14039.)

Ben Miller
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It's not 100% foolproof, but it seems to be reasonable advice.

I file my taxes as soon as I can if I'm getting a refund, and closer to April 15th if I owe taxes. So if I get W-2s in early February, and I file in mid-February, that's only a 2-3 week window for someone to beat me to the punch.

So to say that you will never beat an identity thief seems too absolute. The pain (for you and the IRS) of dealing with return fraud is a decent incentive to file early, but you also want to make sure that your return is accurate and you have fully taken advantage of all deductions. I would certainly not rush the process just to try and front-run ID thiefs.

D Stanley
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I don't think the suggestion is saying "If you file the moment it's possible, you will beat all thieves". That's absurd on its face, particularly as the thief can file before your W2 is available to you.

However, if you assume you're a random target, then thieves will be presumably filing returns over the entire January-April timeframe. Making sure to file during the earliest reasonable window will decrease the threat envelope, meaning you have a reduced likelihood of having a fraudulent return filed using your information.

Joe
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