Is Tax Identity Shield Your Best Defense Against Tax Identity Theft

Tax Identity Shield is a service that claims to protect your identity from tax-related scams, but is it really worth it? According to the IRS, tax identity theft occurs when someone uses your Social Security number to file a tax return and claim a refund.

The IRS reports that tax identity theft results in a loss of over $1 billion annually, with victims often unaware of the crime until they try to file their own tax return. This can lead to delays and even additional fees.

Tax Identity Shield offers a range of services, including credit monitoring and identity theft insurance. However, the cost of these services can add up quickly, with prices starting at around $10 per month.

A tax identity shield, also known as tax identity theft protection or tax identity theft monitoring service, is a specialized service designed to help individuals protect themselves against tax-related identity theft.

This service offers proactive measures to detect and prevent fraudulent activities related to tax filing, and provides assistance in case of identity theft incidents involving taxes.

The primary goal of a tax identity shield is to minimize the risk and impact of tax identity theft on taxpayers, which can be a significant financial and emotional burden.

Tax-related identity theft is a form of fraud that occurs when criminals use stolen personal information to file fraudulent tax returns or claim tax refunds on behalf of unsuspecting victims.

Tax identity theft can lead to significant financial and emotional distress for the victims, making it essential to take proactive measures to protect oneself.

Tax identity shields offer a range of features to protect your personal and financial information. Some tax identity shields continuously monitor your personal information, such as your Social Security number and tax-related data, for any suspicious activities or signs of potential identity theft.

If the service detects any unusual activity, it immediately sends fraud alerts to the individual, notifying them of potential threats and prompting them to take action. This can be a huge relief, especially if you're not tech-savvy or don't have time to constantly monitor your accounts.

Tax identity shields can also include dark web monitoring, which scans underground forums and websites where stolen personal information is often traded, to check if your data is at risk. This is a crucial feature, as many identity thieves operate on the dark web.

In case of tax identity theft, the service provides expert assistance and guidance to help you resolve the issue, including filing an identity theft report with the IRS. This can be a daunting task, but with the right support, you can navigate the process with ease.

Some tax identity shields may offer insurance coverage to reimburse you for expenses incurred due to identity theft, such as legal fees, lost wages, or costs related to restoring your identity. This can be a lifesaver if you're hit with unexpected expenses.

Tax identity shields also often provide educational resources and tips on how to protect yourself from tax-related scams and identity theft. This is a great way to stay informed and proactive about your financial security.

Here are some key features of a tax identity shield:

Tax identity theft can be a nightmare, but there are steps you can take to protect yourself. Using a secure Wi-Fi network when filing online is a good start, as it helps prevent hackers from accessing your personal information.

The IRS offers an Identity Protection PIN (IP PIN) that can help shield taxpayers from tax-related identity theft. This six-digit number is assigned to taxpayers who participate in the program and must be used when filing federal tax returns.

Filing as soon as possible can also help prevent thieves from mishandling your personal information. Drop off your tax return at the local post office or in an official mailbox if you're filing by mail, rather than leaving it in your home mailbox.

Taxpayers can request an IP PIN online through the Get an IP PIN tool, but they must first verify their identity. Those who can't validate their identity online can file Form 15227, Application for an Identity Protection Personal Identification Number.

Some tax identity shield services can provide an additional layer of protection, but it's essential to remember that no service can guarantee complete protection against identity theft. Taxpayers can also take several proactive steps to protect themselves and safeguard personal information, such as shredding or burning sensitive documents they no longer need.

Here are some preventative measures to help protect yourself from tax identity theft:

H&R Block's pricing can be a bit overwhelming, but let's break it down. The free version only offers one free state return, and upgrading to Deluxe is highly recommended for features like the deduction maximizer and live chat support, which costs $49.99.

Upgrading to Premium ($69.99) or Self-Employed ($104.99) gives you access to more forms and the ability to collect data from popular expense management apps. The Tax Pro Review service is only worth it for Self-Employed users and costs a whopping $144.99.

Aside from tax season discounts, prices can't be reduced further, and extra services like state return filing ($39.99 per state) can add up quickly. You can, however, buy the identity theft preventer and IRS audit helper together to save 29% and pay just $24.99.

Filing with H&R is a relatively straightforward process, but they do make it a bit confusing by requiring you to visit the state taxes section to review a summary of all returns.

To add extra services, you can choose from options like Tax Identity Shield, which offers help in case of identity theft for an extra $14.99, or worry-free audit support for $19.99.

H&R also offers Tax Pro Review, a service that has your return reviewed by a tax expert before filing, but be aware that its price jumps to $49.99 if you upgrade the software.

One convenient feature is that H&R allows you to deduct regular and additional service fees from your collected refunds, but this will incur an extra $34.95 charge.

You can avoid this fee by paying with certain credit or debit cards.

Here are some pricing details for H&R's services:

An Identity Protection PIN is a powerful tool in preventing identity theft. The IRS's Identity Protection PIN is an added layer of security for taxpayers.

Taxpayers who participate in this program are assigned a six-digit number that they use to prove their identity when they file their federal tax return. This number is valid for one year, and new IP PINs are generated each year for security reasons.

Even if a thief has already filed a fraudulent tax return, an IP PIN could prevent the taxpayer from being a repeat victim of tax-related identity theft. Tax pros should advise clients affected by identity theft to request an IP PIN.

To get an IP PIN, taxpayers can use the Get an IP PIN tool online, which allows people with a Social Security number or individual taxpayer identification number to request an IP PIN. Taxpayers must review the identity verification requirements before trying to use the tool.

Taxpayers who can't validate their identity online can still get an IP PIN by filing Form 15227, Application for an Identity Protection Personal Identification Number. The 2023 threshold for this form is $73,000 for individuals or $146,000 for married filing jointly.

Here are some key facts to keep in mind about IP PINs:

Taxpayers who can't validate their identity online or by phone, or those who are ineligible to file a Form 15227, can make an appointment at a Taxpayer Assistance Center. They will need to bring one current government-issued picture ID and another identification document to prove their identity.

If you're a victim of tax identity theft, don't panic. You can take steps to fix the problem.

Respond to the IRS as soon as possible if they've contacted you. You'll need to use the number they provide in their letter.

You can complete a Form 14039, Identity Theft Affidavit, if your SSN has already been used to file taxes fraudulently. This form can be submitted online or by mail.

IdentityTheft.gov is a helpful resource that offers steps for you to take if you believe you've fallen victim to tax identity theft.

If you can't validate your identity online, you can file Form 15227, Application for an Identity Protection Personal Identification Number, if your income is below $73,000 for individuals or $146,000 for married filing jointly. This will trigger a phone call from the IRS to verify your identity.

Taxpayers who can't validate their identity online or by phone, or those who are having technical difficulties, can make an appointment at a Taxpayer Assistance Center. They'll need to bring a current government-issued picture ID and another identification document to prove their identity.