Taxpayers are filing their taxes early this year to avoid having an identity thief file their return before they do. But what is surprising some is that the government keeps their tax refund and uses it to pay down their student loan debt when they are in default. Called the Treasury Offset Program, the Department of Education is able to take Social Security payments and tax refunds and apply them to outstanding debt that you have not been paying.
Experts in the field say the Department of Education is required to notify you ahead of time if they intend to apply this offset program to your funds. Within this notification are rules and what you can do to avoid this happening to your tax refund at tax time.
You can request a hearing if your loan was not in default when the funds were taken and have them sent to you. Another thing you can do is to adjust your withholding on the w-9 form. This tells your employer to not take as much out of your checks each pay period. This will give you more money during the year to pay your student loan payments, and reduce your refund at the end of the year.
Also, set up a payment option with your student loan that you can afford. Getting in default of you student loan causes problems in your financial life that you would rather avoid. Your credit will be affected and the interest you need to pay on other loans is likely to go up.
How to maintain security when filing taxes electronically
Millions of U.S. taxpayers have used electronic software applications like TuboTax.com to e-file their taxes, many doing so from the home desktops. Roughly six percent more consumers are using this method of submitting tax forms, than the numbers who did so in 2012.
Though e-filing is convenient and easy, it can create a risk to the taxpayer, with the filing of fraudulent tax forms and and identity theft. These undetected thieves were able to get away with over three and a half billion dollars in 2011, according to the Inspector General.
The following tips for protecting your information and identity are offered by experts in internet security
One method of committing fraud is to send an email to the taxpayer, pretending to be the IRS. This form of gaining access, known as phishing, allows malware access to the user’s computer, to gain access to important taxpayer information. The emails can look like official requests from the government office and may claim some kind of problem with a social security number or taxpayer information. Many taxpayers have provided such information, unaware they are handing it over to an imposter.
The IRS never sends emails or text messages to taxpayers, to clarify personal identity or correct taxpayer information. Any person who receives a suspicious email message should forward it to the IRS, without opening the message itself or any attachment.
Keep Personal Information Safe
Aside from being aware of false email messages, taxpayers can take additional measures to protect personal data. Using a different password for electronic tax filing, from those used for other internet accounts, is one safeguard that makes it more difficult for cyber criminals to get your information.
Avoid sending tax files to the IRS in public locations where wireless internet is available. These connections a re open to all users and can be accessed by anyone, thus improving the changes of gaining access to an individual’s personal computer. Home networks that are password protected are best for sending tax forms.
Social networking sites like facebook are other places criminals hang out to gain personal information. If your site includes minor children, the thief now knows you claim dependents on the tax return, which allows them to make fictitious tax returns look more like the real thing.
Breaches in internet security are another cause for concern. The recent incidents with Target, Sony, and other retailers shows how easy it can be for cyber thieves to get account and personal address information.
No Refund (Photo credit: cheerfulmonk)
Though these incidents can occur, the internet e-file process is generally secure. There are red flags to look for the keep your information safe. Filing Taxes using the e-file method and software such as TurboTax.com can make the tax filing process a much simpler ordeal that saves time and money.