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We usually think of identity theft in terms of someone getting their hands on the credit cards and bank routing numbers of another. Tax-time identity theft has a little different look. According the the IRS, this is what tax-related identity theft looks like.
The most typical type of identity theft filing happens when a person using the SSN of another person files a false return very early in the tax season. When the real person attempts to file later in the season, the real return may be blocked. If you fell vitim to such a scheme, you could expect a lenghty delay in getting any refund actually owed to you. For many, any delay in receiving a significant refund could result in financial hardship.
There are two other examples typical of identity theft at tax-time. In some cases, the ID thief will use the SSN of a disabled person living in an assisted living community. The false return will show fake self-employment earnings with income and refundable credits resulting in a refund. Most damaging in this scenario is when the IRS reports income to the Social Security Admistration. Through no fault of thier own, the disabled person my find themselves discharged from the assisted living community they need.
Finally, identity thieves may obtain data from the Social Security death Master File via the internet and use that to find the names, SSNs, birth dates, and locations of recently deceased minor children and then file claims on them as dependents on a false tax return. When the unfortunate parents try to electronically file a return claiming their child as a dependent during the year in which he or she died, they are unable to do so because the child was previously claimed by the identity thief.
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