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If You File Taxes Online, Watch For Identity Thieves [AUDIO]

Filing your tax returns electronically is becoming more and more popular, but doing so can be risky.

Justin Sullivan, Getty Images

Since 2008, the IRS reports almost half a million people have been victimized by identity theft tax fraud, and the number continues to grow.

Jay Foley, the founder of ID Theft Info Source, says, “Unless you have major reasons for having your taxes done by a CPA or tax service, do your taxes yourself – every year we hear about an H and R Block or Johnson and Hewitt office where somebody did something not so honorable – things with the information they acquired.”

How to protect the information on your computer

He says if you prepare your own taxes with a program like turbo tax, “and the information is left on your computer…hackers may wind up getting their hands on it -every time that computer is left on and running there’s a possibility that somebody from the outside getting into your computer and seeing your tax return.”

To protect yourself, he says, “Get yourself a nice little 8 gig flash drive, load it onto that – now it’s not even there in your computer – it’s on this drive that’s only part of your computer when it’s plugged in – you keep the info locked up outside your computer, and there’s no way for the kids to share a file, open up a window and allow the hacker to get through your firewall and copy your information.”

Foley points out if a hacker gets a hold of your tax information he can file a return before you do -and collect any refund that you have coming.

“That will generate a false return with the government – the government will then turn and look at your return when you file it and be very concerned…they’ll think you’re either trying to cheat the government or that you don’t know what you’re doing and this can take several months to several years to straighten out .”

He says the hacker can “make up the numbers, file the tax return… and then they’re going to take the return money that’s generated by these dummy numbers – so after you file the legitimate return – the government will hold you responsible for the first return and it will cause havoc in your life.”

Foley adds, “If I’m a bad guy and I get your personal information, there are only two ways you can be guaranteed I won’t use it – one is to have me put to death – which most states won’t allow – and the other is to have be lobotomized, which every state won’t allow – so you have a problem…every computer is subject to virus attacks, Trojan horses – this is the material and information that those programs are looking for.”

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