Due to the financial nature of taxes, as well as the personal information needed to prepare a return, tax returns are prime targets for identity thieves. To put give an idea of how bad things are, the US Government Accountability Office estimates that during the 2013 tax season, over $5 billion in fraudulent tax refunds were issued by the IRS.

In order to prevent yourself from becoming a victim of identity theft, you should take reasonable steps to keep your tax information safe.

Tip #1: Secure your personal computer and Internet connection

Make sure your computer or mobile device has up-to-date firewall, anti-virus and malware/spyware security software. These can help detect malicious software that can steal information and record keystrokes. Additionally, if using a Wi-Fi Internet connection, make sure it’s protected before doing anything that requires the submission of personal information or typing of passwords, like online banking.

Tip #2: Protect personal information

Don’t provide personal information such as date of birth, social security number, address or other information unless it’s truly necessary. Also, don’t carry your social security card in your wallet or purse.

Tip #3: Avoid scams

Learn to spot suspicious e-mails or telephone calls stating you must confirm the security of a financial account or asking for personal information. If you think an e-mail or telephone call might be real, do not click on the link provided in the e-mail or provide personal information to the person who called you. Instead, contact the financial institution directly through a phone number known to be legitimate, such as on the back of your credit or debit card, to make sure the e-mail or phone call you received is not fraudulent.

Tip #4: Use an Identity Protection PIN (IP PIN) when filing your taxes

The IP PIN is offered by the IRS and consists of a six digit number that taxpayers provide with their returns to help prevent fraudulent federal tax returns. Only certain taxpayers are eligible, and once an IP PIN is used for one year’s returns, it must be used for all subsequent years.

Tip #5: Go paperless

Whether it’s e-filing taxes or receiving tax related documents via a website, it may be wise to have financial documents obtained electronically. If going paperless isn’t an option, having mail with sensitive personal information delivered to a post office box or a locked mailbox is an alternative.

Tip #6: Request a free credit check

Federal law allows you to receive a free credit report every year from the following credit reporting agencies: Equifax, TransUnion or Experian. Checking your credit report can help detect identity theft before you would otherwise notice it.

Tip #7: Use Form 8821

The IRS allows taxpayers to authorize another party to receive correspondence from the IRS. In order to utilize this service, individuals must complete Form 8821, which allows taxpayers to designate someone else, even themselves, to receive communications from the IRS. This can serve as a warning system should an identity thief deal with the IRS without the taxpayer knowing. For example, if an identity thief has submitted a fraudulent return and the IRS contacts the identity thief, the taxpayer can receive the same correspondence the identity thief has received.

Tip #8: Destroy then dispose

Before getting rid of anything that contains personal information, make sure that information has been properly destroyed first. From shredding old pay stubs to wiping computer hard drives to resetting mobile devices, make sure steps are taken to ensure personal information cannot be accessed by anyone else.

In Conclusion

Many of the above tips will be common sense for some taxpayers. For others, it won’t be applicable. Even if all of the above tips are followed, they don’t guarantee that tax information can’t be stolen. However, it makes things much harder for identity thieves, who often focus on the easiest targets.

It’s a few days before the April 15^th tax deadline and you’ve just finished preparing your return for last year’s taxes. Unfortunately, it turns out you owe additional taxes in an amount exceeding your ability to pay off the tax debt in full when your tax return is filed. You know you will be able to pay off the entirety of this tax debt, but you’ll need more time. What can you do? The answer will depend on several factors, such as how much you owe and how much time you need.

Short Term Agreement Request

If you need only a small amount of time, you can ask the IRS for a short term extension. The extension cannot exceed 120 days and the entire tax debt will need to be paid, subject to interest and applicable penalties. The biggest advantage of the short term agreement plan is that there is no user fee. You can request a short term agreement over the telephone or through the IRS’ website by applying for an Online Payment Agreement.

Set Up a Payment Plan

If more than a few months are needed to pay off the tax debt, a taxpayer can set up an installment plan where the taxpayer makes monthly payment to pay off the tax debt over time, up to a few years. However, the taxpayer must qualify before the IRS will agree to a payment plan.

Generally speaking, as long as the taxpayer owes less than $50,000, is up to date with all tax returns and can pay off the entire tax debt in a few years, the IRS will approve the payment plan. When requesting a payment plan, the taxpayer will get to choose the day of the month to make the monthly payment and the monthly payment amount. The monthly amount must be large enough to pay off the debt within a few years, but not too large that the taxpayer risks not making a payment.

Setting up a payment plan is not free. In addition to the interest and penalties the taxpayer will owe due to the delay in paying off the tax debt, there will be user fee. As of the time of this writing, the fee is either $52 for payments made via direct debit, $120 for non-direct debit payments or $43 for qualified low income taxpayers. Direct debit refers to giving permission to the IRS to automatically withdraw the monthly payment amount from the taxpayer’s checking account.

Taxpayers may set up a tax payment plan by either calling the IRS, submitting Form 9465 or using the using the Online Payment Agreement Application. If the payment plan request is being made when the current tax return has not yet been filed, it’s recommended the tax payer submit Form 9465 along with the return. If the return has already been filed when the payment plan request is being made, using the Online Payment Agreement Application is suggested.

Information needed to set up a payment plan will include the taxpayer’s:

•  Name
• Social Security number
• E-mail address
• Mailing address from most recent processed tax return
• Filing status
• Date of birth

In Conclusion

The IRS is fairly agreeable to giving taxpayers more time to pay off their tax debts. However, this extra time is not free, as penalties and interest will almost always accrue during the extension, on top of the fee for setting up a payment plan.