Exercise caution to prevent tax season identity thefts
Every year, Carbon County residents spend many hours preparing taxes hoping that they will not wind up owing the state or government money.
But what many consumers fail to realize is that the government isn't the only one who may collect their hard earned cash - so may identity thieves.
In a time where one man's trash is another man's treasure, it is important to ensure that the multitude of documents used to prepare taxes are appropriately stored or destroyed.
In 2005, consumers across the United States lost nearly $57 billion to criminals who stole their identities.
Although the statistic may be alarming, there are ways for Carbon County residents to protect themselves from related crimes, especially during the tax filing season.
While it may appear easier to file everything, paper trails are still an identity thief's dream.
Recent research conducted by shredder manufacturer Fellowes Inc. indicates that nearly 40 percent of Americans believe identity theft is most likely to occur through online exchanges.
But in reality, data collected nationwide indicate that Internet fraud represents only 9 percent of the total number of identity theft crimes reported in the United States.
The majority of identity theft crimes occur through paper documents and stolen information, making it crucial to properly store or destroy the sensitive documents used during tax season.
"Tax season can leave consumers with mountains of paperwork, which makes them more vulnerable to identity theft," explained Kristen Gehrig, global marketing director for Fellowes. "Shredding is one of the easiest ways to ensure your information doesn't end up in the wrong hands, but you also need to be conscious about what documents are important to keep."
Simply knowing what needs to be filed or shredded will alleviate potential problems. In the event information must be retained for extended periods of time, the documents should be stored in a secure place.
Examples of information include:
Tax returns - The U.S. Internal Revenue Service has three years to challenge information in returns and six years to conduct an audit based on unreported income.
People should keep tax returns and supporting records like W-2s and 1099s for at least seven years.
Investment statements for taxable accounts - Most brokerage firms and mutual fund companies send annual statements summarizing the year's transactions.
Once people have the annual reports, they should shred monthly and/or quarterly statements.
Bank statements- People should keep the information that backs up tax returns for up to seven years.
Other bank statements may be shredded after reviewing for errors.
Credit card statements - Consumers should keep statements for big purchases like jewelry or large appliances. The information might be needed for warranties.
If people put charitable contributions on credit cards, they should keep the statements for tax records.
Other monthly statements may be shredded after being reviewed for errors or unauthorized purchases.
Pay stubs - Saving the wage or salary information is a mistake.
Pay stubs contain everything an identity thief needs to open an account.
Employees should keep three months of wage or salary history only if they are applying for a mortgage.
Automatic teller machine receipts - People should shred all receipts after balancing bank statements.
Canceled checks - With no significance for tax or other purposes, the checks should be destroyed after one year.
Retirement plan contributions - Consumers should keep records of contributions to non-deductible individual retirement accounts indefinitely.
Without information, people may find themselves paying taxes again when the money is withdrawn.
Some financial institutions keep records of IRA contributions, but it's best for consumers not to count on the practice.
Insurance policies, wills and legal documents - All legal documents should be kept indefinitely.
Local residents should remember to store the documents in a safe and accessible place such as a fireproof box that is well hidden in homes.
When destroying records, it is best for consumers to use a shredder that can slice credit cards as well as compact disks and has confetti-cut capabilities.
Confetti-cut shredders ensure that private information is reduced to small, unidentifiable pieces, making it nearly impossible for a would-be identity thief to piece the information back together.
Carbon County residents should consider implementing several additional protective measures against identity theft during the tax season.
When filing tax returns via the Internet, consumers should make sure computers have updated anti-virus, anti-spyware and firewall software.
People should destroy all paperwork used to calculate taxes such as receipts, bank records and various forms.
Finally, local residents should pay particular attention to W-2 or 1099 forms because the documents contain Social Security numbers.
Accessing the numbers is a would-be thief's dream. A missing form may leave people vulnerable to identity theft crimes.
For additional identity theft prevention tips and information on financial records, Carbon County residents with Internet access may visit www.IDconfidence.org.
Local consumers may also check with consumer protection officials and tax professionals for more information.