Do you worry you will become a victim of tax fraud or tax identity theft? You are not alone especially during tax season.
A recent study shows in spite of being worried about fraud, 45 percent of those surveyed admit to storing tax paperwork in a box, desk drawer or unlocked cabinet at home or work.
What’s more, nearly one in five admit they do not shred tax paperwork or physical documents containing sensitive information before throwing them away. That is according to Shred-it’s 2019 Tax Season and Fraud Prevention Report which reveals taxpayer concerns, habits and insight on information security and fraud awareness during tax season.
While nearly half of taxpayers will file their own taxes online via tax preparation software, more than one third will file with a certified tax preparer. Of those filing with a tax preparer, 44 percent say the person preparing their tax returns has not described how they would store or dispose of documents containing their personal information, highlighting the need for conversations around data protection during tax season.
“The Tax Season and Fraud Prevention Report reveals how common these risky tax filing habits are and how they put taxpayers in jeopardy for fraud or identity theft,” said Monu Kalsi, Vice President of Marketing for Stericycle, the provider of Shred-it information security services.
“As we near the April 15 tax filing deadline, we encourage everyone to reassess how they are handling their own tax documents that contain sensitive information and also question how those preparing taxes for us are doing the same.”
These risky habits could be contributing to tax identity theft and tax fraud with the report revealing one in four taxpayers know someone who has been a victim of tax fraud. Tax fraud fears hit millennials the hardest with 43 percent saying they are worried they could become a victim of tax fraud or tax identity theft, compared baby boomers (34 percent) and Gen Zs (33 percent).
Additional findings from the survey include:
Tax documents are believed to be the most susceptible to fraud.
The majority of taxpayers (54 percent) think tax documents (e.g. W-2, 1099 forms, etc.) are the most susceptible document to information fraud or identity theft, compared to auto loan documents (15 percent) and mortgage documents (6 percent).
Women (57 percent) think tax documents are the most susceptible to information fraud or identity theft, compared to men (49 percent).
Baby boomers (44 percent) are the least likely to think tax documents are the most susceptible to information fraud or identity theft, compared to millennials (64 percent) and Gen Zs (55 percent).
Taxpayers think filing taxes online puts them at the greatest risk of becoming a victim of tax fraud or tax identity theft.
More than one-third of taxpayers (35 percent) think filing taxes online with a tax preparation software puts them at the greatest risk of becoming a victim of tax fraud or tax identity theft. That is compared to more than one in four (26 percent) who think filing with a friend or family member puts them at the greatest risk and one in 10 (10 percent) who think filing taxes with a certified tax preparer puts them at the greatest risk.
Despite concerns around filing taxes online, millennials (54 percent) are the most likely to say they will file their taxes online with tax preparation software, followed by baby boomers (45 percent) and Gen Zs (43 percent)
Taxpayers don’t know how long they’re supposed to keep documents for.
While the majority of taxpayers (42 percent) keep tax documents for 7+ years before disposing of them, 26 percent keep them for 4-7 years, 22 percent keep them for 1-3 years, and 5 percent keep them for less than one year.
Men (7 percent) are slightly more likely than women (4 percent) to keep tax documents (e.g. W2, 1099 forms) for less than a year before disposing of them.
Gen Zs (38 percent) and millennials (37 percent) keep tax documents (e.g. W2, 1099 forms) for 1-3 years before disposing of them.
To learn more about the 2019 Tax Season and Fraud Prevention Report and to receive additional findings, download the report here.
