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Avoid fraud when filing taxes online Add to ...

As the tax filing deadline rapidly nears, most of us are thinking more about getting our taxes done quickly than getting them done safely. Yet, as we gain comfort with fast and convenient online filing software, fraudsters are coming up with ways to steal our sensitive information.

"There are always scams at this time of the year that are preying on the fact that individuals are more comfortable sharing information online during tax season," says Scott Mitic, CEO of Trusted ID, an identity theft protection company. "There is a higher rate of fraud and ID theft during tax season."

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One of the main risks facing online filers is a compromised computer. "This is the time of year when spyware is exceptionally dangerous," Mr. Mitic warns. Spyware, software that gathers information from your computer without your knowledge, can watch and record everything you enter online.

"In the best of times, this is a very significant risk for compromising personal info. During tax time, it's a higher risk because of the sensitivity of the information you're giving in a short period of time."

You also need to watch out for fraudulent email solicitations, which tend to proliferate during tax season. The Canada Revenue Agency (CRA) has warned of scams in which taxpayers receive an email claiming to be to be from the Canada Revenue Agency (CRA) but is not. Some claim to need your social insurance and bank account numbers in order to process your refund. Others emails will refer you to a website that resembles the CRA site and requests a verification of your personal information. Such emails are to be ignored or reported. The CRA, like other government agencies, does not request information via email.

"You're 100% guaranteed that if you get an email from the CRA to go to a website via a link, it's a scam," Mr. Mitic says. "It tricks you into providing personal information which on the surface seems logical."

To avoid falling for fraud this tax season, keep in mind the following tips.

Use software you can trust: Choose an online tax tool that is reputable and trusted. Be wary of a new tax website that suggests if you enter your personal information you'll get a better or faster refund. "This is one area of your life you don't want to experiment with," Mr. Mitic counsels.

Protect your computer: Before you file your taxes online, make sure you have a firewall running, along with current anti-virus and anti-spyware software. There are many good free sources for anti-spyware. Mr. Mitic recommends downloads from Microsoft or AVG which offer free protection to consumers.

If possible, file your taxes on a computer that is not used to download music or movies from file sharing websites. Free content sites are the most prolific sources of spyware, according to Mr. Mitic. When you're downloading the latest album by your favourite band, you may also be picking up a snippet of dangerous code.

Be aware: Be cognizant of your computer's behavior when you're doing your taxes. A very slow computer is often a sign of a computer that has spyware on it. Just as any good doctor analyzes the symptoms of an illness, be aware of what might cause a slow computer.

Securely store your files: Another danger of using any website or simply doing taxes on your computer is the record you leave behind. Once you're finished doing your taxes, find the file that contains all that personal information and transfer it off of your computer. Mr. Mitic recommends saving the file to a USB drive or burning it to a CD and keeping it somewhere safe in your house, preferably a locked safe. "If your computer is stolen, you could lose your identity because of the detailed financial information," he says. Increasingly, when a computer or laptop is stolen, thieves search through files for personal information.

While there are dangers online, it is still a secure means of filing taxes and there is no need to become paranoid or refrain from using well-known tools. After all, anytime you are sharing your personal information, there is a chance of fraud.

"The preparation or submission of taxes online is, in many cases, safer than the offline process of mailing documents back and forth and having your information handled by multiple people," Mr. Mitic says.

As long as you take steps to protect yourself, you'll have a safe tax filing season.

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