The Smart About Money website will be retiring on July 31, 2021. Learn more about this decision.


Protect Your Personal Information on Tax Returns

a combination lock and at symbol

Tax season is the one time of year when nearly every American divulges personal information about his or her financial life to outsiders. The following are some red flags to be aware of this tax season.

Beware of “Phishy” Emails

The IRS does not send unsolicited emails to taxpayers, but that doesn’t stop people from impersonating the IRS via email to steal your identity in a practice dubbed “phishing.”

How does phishing work? You receive an email with the bait such as a fake refund. The email directs you to open an attachment or click a link to a form to claim your refund. But first, you have to divulge personal financial information such as credit card numbers, personal identification numbers, or your Social Security number.

You can avoid this tax scam by remembering that the IRS will never send you an email requesting this information. However, if you find such an email in your inbox, follow the steps below:

  • Compare it to sample real-life phishing tax scams and forward the email to [email protected]
  • Don’t open attachments and avoid clicking on links, as they may contain harmful code that infects your computer, potentially exposing your personal information.
  • Never volunteer your personal financial information in response to, or to the sender of, an unsolicited email.
  • Check your refund status with this online tool from the IRS.

Say “No” to Tax Refund Anticipation Loans (RALs)

Another tax refund scam is an RAL. The lender is hoping that you'll need money and be willing to pay a hefty fee so you won't have to wait for it. Even if you do need money, avoid tax refund loans at all costs.

What is a RAL? A tax preparer might offer a loan that is backed by your projected refund. RALs last one to two weeks or until your refund check arrives and you can repay the loan. The interest rate, plus the filing fee and a same-day processing fee, on tax refund loans can cost hundreds of dollars. You may be saddled with debt if your refund doesn’t pan out.

Instead, file your returns electronically and request that your refund be deposited directly in your bank account. You should receive your refund in 10–21 days. If you don’t have a bank account for an electronic deposit, ask a nearby bank or credit union about establishing a low-cost savings account.

Find Trusted Assistance

If you think you need help preparing your taxes this year, consider the following free resources:

  • Low-to-moderate-income earners may qualify for free tax preparation services through the IRS called the Volunteer Income Tax Assistance (VITA) program. To find a VITA location in your area, click here or call 1-800-906-9887.
  • The Tax Counseling for the Elderly (TCE) offers free tax assistance to those 60 years old and above. The program specializes in pension and retirement issues that are unique to seniors. To learn more about TCE click here.

If you don’t qualify for free and secure tax preparation assistance, do your homework when choosing a tax preparer so you don't end up the victim of a tax scam:

  • Look at the professional’s history and credentials. Avoid anyone who says they can get you a larger refund than other preparers or who bases their fee on a percentage of the refund.
  • You are responsible for your return. Remember that you are legally responsible for the return that is being filed. Although the preparer bears most of the tax work, if the IRS confirms fraudulent items in your return, you may be liable for additional taxes, interest and possible penalties.

[Any reference to a specific company, commercial product, process or service does not constitute or imply an endorsement or recommendation by the National Endowment for Financial Education.]