Today, more than ever, people are vulnerable to identity theft schemes. Unfortunately, no plan is foolproof, but there are steps you can take to protect yourself. Two of the most effective preventative measures are to freeze your credit and obtain an Identity Protection PIN from the IRS.
Often, the purpose of identity theft is to open credit in the victim’s name. A credit freeze helps prevent this because even if a thief is able to obtain your personal information, any attempt to open credit in your name will be declined.
Credit bureaus won’t release your credit history to anyone unless you unfreeze it. For this reason, we don’t recommend this strategy to everyone, particularly if you may need to unfreeze your credit often. If, however, you rarely open new credit, this is one of the best proactive steps you can take.
Freezing credit is actually quite easy and very affordable. For full protection, credit must be frozen at each of the three credit bureaus. You can make the request online or via mail. Each spouse must complete these actions at each credit bureau for both to be protected.
The cost to freeze credit at each bureau is different depending on the state. In Georgia, it’s currently free. If you reside in another state, it can range from $0 – $10 per freeze. Additionally, in Georgia as well as many other states, credit freezes are free for those 65 and older.
- Go to https://www.equifax.com/personal/credit-report-services/
- Enter your information.
- Choose “Place” a security freeze.
- Confirm the action and pay the fee.
- You will receive a PIN. Keep the PIN in a secure place.
- Go to https://www.transunion.com/credit-freeze
- Choose “Place a Security Freeze.”
- Open an account and confirm your identity.
- Pay the fee.
- You will be able to choose your own PIN or have it generated for you. Keep the PIN in a secure place.
- Go to https://www.experian.com/freeze/center.html
- Enter your information. Also, at the bottom of this section, you have the option to create your own PIN or have one generated for you.
- Review the order and pay the fee.
- Verify your identity and receive your PIN. Keep the PIN in a secure place.
Of course, there will be times when you need to access your credit. When this happens, you can request a “thaw” that requires you to provide your PIN and pay a small fee (usually the same amount you paid to freeze your credit). Once you do so, your credit will become available for a specified amount of time or indefinitely, depending on which you choose.
Identity Protection PIN from the IRS
In January, we wrote about another way to protect your identity – obtaining an IRS Identity Protection PIN (IP PIN). Identity thieves commit tax refund fraud by stealing personal information to file victims’ tax returns to receive refunds. This type of fraud is prevalent so we wanted to provide this information again. The highest rates of tax refund fraud have occurred in Georgia, Florida, and Washington, D.C.
The IP PIN is a six-digit number assigned to eligible taxpayers to provide additional proof of identity when filing a federal tax return. (Unfortunately, IP PINs aren’t available for state returns.) Once you obtain the IP PIN, you must include it on your federal tax return. Even if someone has your Social Security number or other personal information, they can’t file a federal tax return without this PIN.
Only some taxpayers are eligible for an IP PIN:
- Someone who filed a federal tax return last year as a resident of Florida, Georgia, or the District of Columbia
- A previous victim of identity theft who had an identity theft case that the IRS resolved
- A person who has received a notice from the IRS inviting that person to voluntarily opt in to obtain an IP PIN
If you fit into one of these categories and would like to obtain an IP PIN, visit www.irs.gov/Individuals/Get-An-Identity-Protection-PIN.
Once you get an IP PIN from the IRS, you’ll receive a new one each December. If the tax return is filed jointly, it isn’t necessary for both spouses to get an IP PIN; one spouse is sufficient. Also, be sure to inform your accountant if you obtain one.
If you decide to freeze your credit and obtain an IP PIN from the IRS, complete the IP PIN request before freezing your credit. The IRS uses credit information to verify who you are when you apply for the IP PIN online.
Other Security Measures
- File your tax return as soon as possible. Although there are reasons you may need to wait, filing as soon as you’re able to do so can make a difference. Criminals filing a fraudulent tax return often do it at the beginning of tax season.
- If you use TurboTax, H&R Block or a similar online service, choose a password that is different from others you use and one that’s not easy to guess. Although an identity thief can open a separate account using personal information, “account takeover” through stolen passwords accounts for 40% of fraudulent returns.
- Change passwords for your email and financial accounts at least every 90 days.
- Don’t use the same password for everything. If the password is the same for all accounts/email addresses, a thief will be able to access all of your information. A password manager, such as LastPass or Dashlane, can assist with keeping track of the different passwords you use.
- Keep security on your computers up-to-date to detect password malware.
- Don’t provide your Social Security Number or other personal information over the phone, mail or Internet unless you know for sure who you’re dealing with on the other end.
- Shred any documents that have sensitive information, such as account numbers and Social Security Numbers or keep them in a secure place.