Someone Tried to File Taxes in My Name. What Should I Do?

Discovering that someone has attempted to file taxes in your name can be alarming. Tax-related identity theft can delay refunds, cause complications with the IRS, and lead to financial fraud. Taking immediate action is necessary to minimize damage and regain control of your tax records.

Addressing this issue requires notifying the proper authorities, correcting inaccurate filings, and securing your personal information to prevent future occurrences.

Key Warning Signs of Unauthorized Filings

Unexpected IRS correspondence is often the first indication of fraudulent activity. A notice about a tax return you never submitted, a transcript request you didn’t make, or a letter regarding a suspicious filing can all signal identity theft. The IRS typically sends Letter 5071C or 4883C when they detect inconsistencies, asking for identity verification. Ignoring these notices can result in delayed refunds or additional fraudulent filings.

Another red flag is the rejection of your electronically filed return due to a duplicate Social Security number. If the IRS system flags your submission because a return has already been processed under your SSN, it’s a strong indication of fraud. This prevents you from submitting your legitimate return until the matter is resolved, potentially leading to penalties if deadlines are missed.

Receiving tax documents for income you never earned is another warning sign. If you get a Form W-2 or 1099 from an unfamiliar employer or financial institution, someone may be using your identity for employment or financial transactions. This can create discrepancies in your tax records, leading to an inflated tax liability or triggering an IRS audit.

Alerting Tax Authorities

If you suspect someone has filed a tax return using your information, notify the IRS immediately. Submit Form 14039, Identity Theft Affidavit, to formally report the fraud. Include a detailed explanation of the fraudulent activity and attach copies of any IRS notices you received. Filing this affidavit helps prevent the processing of fraudulent returns and adds safeguards to your account.

Once the affidavit is submitted, the IRS places an identity theft indicator on your account, requiring additional verification before processing future returns. This may delay your legitimate refund, but it helps prevent further fraud. You may need to verify your identity in person at an IRS Taxpayer Assistance Center or through the ID.me online system. If a fraudulent return has already been processed, the IRS will review your account and make necessary corrections.

If state taxes are affected, contact your state’s tax agency separately. Each state has its own process for handling tax-related identity theft. Many states offer identity protection programs, such as the IRS’s Identity Protection PIN (IP PIN), which adds an extra layer of security to your tax records.

Correcting Your Records

Ensure your tax records accurately reflect your legitimate filings. If a fraudulent return was processed, the IRS may need to adjust your account by removing improperly claimed credits, deductions, or income. This process can take months as the IRS investigates. Keep copies of all correspondence and follow up regularly to check the status of corrections.

Review your IRS account transcript to identify discrepancies. This document provides a history of tax return submissions, payments, and adjustments. If errors appear, submitting an amended return using Form 1040-X may be necessary. If the fraudulent return resulted in an incorrect tax balance, unresolved discrepancies could lead to penalties, interest charges, or collection actions.

Tax identity theft can sometimes trigger an IRS audit, especially if the fraudulent return claimed excessive refunds or deductions. If selected for audit, provide documentation supporting your true tax position, including prior year tax returns, income statements, and financial records. The IRS may also request third-party verification from employers or financial institutions. Submitting requested documents promptly can help resolve the issue faster.

Coordinating with Financial Institutions

Securing financial accounts is just as important as resolving tax discrepancies. Fraudsters who obtain personal information for tax fraud often exploit the same details for other financial crimes, such as opening unauthorized credit accounts or applying for loans. Reviewing recent bank statements and credit reports can help identify suspicious transactions.

Under the Fair Credit Reporting Act (FCRA), you are entitled to a free credit report from Equifax, Experian, and TransUnion every 12 months, available through AnnualCreditReport.com. If identity theft is suspected, you may qualify for additional free reports.

Placing a fraud alert on your credit file requires creditors to take extra steps in verifying your identity before approving new accounts. A fraud alert lasts for one year and can be extended to seven years with an identity theft report. A credit freeze offers stronger security by restricting access to your credit file, preventing new accounts from being opened in your name. Unlike fraud alerts, freezes must be lifted manually when you need to apply for credit.

Possible Legal or Financial Penalties

Tax-related identity theft can have lasting financial and legal consequences if not properly addressed. While the IRS does not hold victims responsible for fraudulent returns filed in their name, failure to correct the issue can lead to penalties for unfiled or late tax returns if your legitimate filing is delayed. Interest on unpaid taxes may also accrue if the fraudulent return resulted in an incorrect balance.

If identity theft extends beyond tax filings, financial institutions or creditors may attempt to collect on fraudulent accounts opened in your name. Under the Fair Credit Billing Act (FCBA) and the Electronic Fund Transfer Act (EFTA), fraud victims have legal protections that limit their liability for unauthorized transactions, but these protections require prompt reporting. If fraudulent activity is not disputed within the required time frame—typically 60 days for bank transactions and 90 days for credit accounts—you may be held responsible for unauthorized charges.

If a fraudulent return claimed income under your Social Security number, it could trigger IRS scrutiny regarding unreported earnings, potentially leading to an audit or wage garnishment if not properly disputed.