Many companies featured on Money advertise with us. Opinions are our own, but compensation and
in-depth research determine where and how companies may appear. Learn more about how we make money.

Advertiser Disclosure

The purpose of this disclosure is to explain how we make money without charging you for our content.

Our mission is to help people at any stage of life make smart financial decisions through research, reporting, reviews, recommendations, and tools.

Earning your trust is essential to our success, and we believe transparency is critical to creating that trust. To that end, you should know that many or all of the companies featured here are partners who advertise with us.

Our content is free because our partners pay us a referral fee if you click on links or call any of the phone numbers on our site. If you choose to interact with the content on our site, we will likely receive compensation. If you don't, we will not be compensated. Ultimately the choice is yours.

Opinions are our own and our editors and staff writers are instructed to maintain editorial integrity, but compensation along with in-depth research will determine where, how, and in what order they appear on the page.

To find out more about our editorial process and how we make money, click here.

By Dan Kadlec
January 15, 2016
Alamy

The IRS begins accepting tax returns on Tuesday Jan. 19. Given the alarming spike in refund fraud, taxpayers who have the necessary documents in order should consider filing right away.

In 2013 the IRS mistakenly paid out $5.2 billion worth of refunds to identity thieves, according to the Government Accountability Office. Since then the number of refunds stolen through fraudulent e-filing has roughly doubled, according to a new estimate from H&R Block.

Tax refunds are an easy mark for thieves. All they need to file a false return is a name, Social Security number and date of birth. In an informal poll of his 50 top executives, Block CEO William Cobb found that seven, or 14%, had false returns filed in their name last year. And that’s at a professional tax preparation company. “The IRS systems are just so far behind,” Cobb says.

There are steps you can take to minimize the risk, including changing the password every year on whatever account you use to file, Cobb says. If you live in Florida, Georgia or Washington D.C., you can get additional protection by establishing a six-digit PIN.

But the surest safeguard may simply be filing early. Once the IRS processes a return with your Social Security number it rejects any duplicates, which of course creates a paperwork nightmare for the legitimate filer. To motivate taxpayers, Block recently launched a lottery program—between Jan. 16 to Feb. 15 the company will give away $1,000 to 1,000 people a day using its services.

All clients are automatically placed in the daily lottery. With 10,000 offices and an expected 6 million client filers over the next month your odds of hitting the $1,000 jackpot will be a lot better than the 1 in 292 million Powerball winners, but still not great—about 1 in 200.

Even if you can’t file early, there are moves you can make to avoid being victimized by ID theft or refund fraud, such as choosing to receive your tax forms via e-delivery and ensuring your wi-fi is secure. To get your return ready as soon as possible, check out Money’s tax tips here and here.

Advertiser Disclosure

The purpose of this disclosure is to explain how we make money without charging you for our content.

Our mission is to help people at any stage of life make smart financial decisions through research, reporting, reviews, recommendations, and tools.

Earning your trust is essential to our success, and we believe transparency is critical to creating that trust. To that end, you should know that many or all of the companies featured here are partners who advertise with us.

Our content is free because our partners pay us a referral fee if you click on links or call any of the phone numbers on our site. If you choose to interact with the content on our site, we will likely receive compensation. If you don't, we will not be compensated. Ultimately the choice is yours.

Opinions are our own and our editors and staff writers are instructed to maintain editorial integrity, but compensation along with in-depth research will determine where, how, and in what order they appear on the page.

To find out more about our editorial process and how we make money, click here.

EDIT POST