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Happy returns: The safe way to e-file your taxes

Liane Cassavoy | March 17, 2014
Tax returns are a tempting treat in a time of data breaches and identity theft. Names, social security numbers, bank account information--it's all right there.

Tax returns are a tempting treat in a time of data breaches and identity theft. Names, social security numbers, bank account information — it's all right there.

If cybercrime makes filing taxes electronically (also called 'e-filing') seem risky, however, printing out your tax returns and putting them in the mail exposes them to far more risks, says Sean Sullivan, Security Advisor at F-Secure Labs. Instead, there are plenty of steps you can take to secure your personal information and make e-filing easier at the same time.

Go digital

E-filing is readily available through tax-preparation software or an online service, or by filing via the IRS or state websites. To e-file safely, experts recommend several common-sense precautions. "There are basic principles you need to follow," says William Pelgrin, President and CEO of the Center for Internet Security

"If you're doing your taxes at home, make sure your computer is secure," says Pelgrin. "Nothing is 100 percent secure, but you can take steps to make sure you're as secure as you can be."

That means keeping your computer and all of its software completely patched and up-to-date, and running reliable and updated security software. You also should uninstall any old, unused applications, as they may be vulnerable to malware.

Secure your personal information

It's also important to store your tax data carefully. "The biggest problem with e-filing is not e-filing itself, it's the records that your taxes create," F-Secure's Sullivan says.

If those records were to get into the wrong hands, criminals could later use your social security number in a variety of ways. They could use it to gain employment, in which case their wages would be reported as earned by you, affecting the amount of taxes you owe in future years. Identity thieves also can use your information to file false tax returns in your name, which allows them to claim your refund.

This practice, known as SIRF for Stolen Income Refund Fraud, is becoming increasingly widespread, says Jane Carpenter of Maine Identity Services, which helps victims of identity fraud. Hundreds of thousands of dollars have been stolen via fraudulent refunds, says Carpenter. Legitimate taxpayers usually don't realize there's a problem until they file their own taxes, and the IRS informs them multiple returns have been received.

Carpenter notes that while the federal IRS website for e-filing offers the highest level of security, not all state websites are comparably safe. She suggests contacting your state's Department of Revenue if you have any concerns. The website for the state of California offers a very detailed rundown of its privacy and security measures, for instance. 

In addition to taking the security measures noted above, experts also advise separating your financial life from your personal life on your PC to the greatest extent possible. Pelgrin says to be sure your kids haven't been playing around on your computer before you use it to prepare your taxes or conduct any financial transactions. They're more likely to visit sites that may unknowingly plant malware on your system.

 

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