Free for 90 days: Sign up now and get 90 days managed free after your first deposit. See offer details


Can’t Wait for Your Tax Refund? Neither Can Hackers

Tax fraud impacts thousands of taxpayers every year. We’ve compiled four quick tips to help protect you against tax fraud and other forms of identity theft.

Articles by Brandon Wu

By Brandon Wu
Head of Privacy and Security, Betterment  |  Published: February 17, 2017

Thousands of taxpayers lose millions of dollars each year to fraudulent tax refunds.

One of the simplest ways to help avoid falling victim to tax fraud is to file your taxes as early as possible.

Your credit history is an important asset—monitor it to make sure nothing looks out of the ordinary, and keep an eye out for phishing scams.

At Betterment, your account security is our priority. But we also recognize that the importance of security expands beyond your Betterment account—like when you file your taxes.

The unfortunate truth of the matter is that tax fraud impacts thousands of taxpayers every year. Halfway through the 2016 tax season, there were already 42,148 tax returns with $227 million claimed in fraudulent tax refunds.1

What’s worse is that the victims of tax fraud often don’t find out about it until they try to file their taxes and have their submissions rejected by the IRS.

We’ve compiled four quick tips to help protect you against tax fraud and other forms of identity theft.

1. File your taxes before hackers do.

The easiest way to help avoid falling victim to this type of tax fraud is simply filing your taxes before hackers have a chance to do it for you. In other words, file as early as possible. And don’t forget, even if you’re not getting a refund, frauders can claim that you’re owed one and cause all sorts of IRS headaches for you later to clean up.

2. Periodically check your credit report.

Consumers are entitled to a free annual credit report from each of the credit reporting agencies Experian, TransUnion, and Equifax. Check your credit reports and make sure they are accurate.

3. Keep an eye out for phishing and other scams.

Hackers will typically utilize phishing tactics in order to obtain W-2s from employers or directly from individuals. Make sure the senders are legitimate, and carefully check links before clicking. If you are unsure, you should always reach out directly to the sender through a confirmed channel (e.g., phone, website) versus responding to the email.

4. Consider putting a freeze on your credit.

Consumers are allowed to put a freeze on their credit at each credit bureau. This may seem drastic, but it makes it significantly more difficult to open fraudulent lines of credit in your name. Please note that if you need to open a new line of credit (e.g., apply for a credit card, get a loan, etc.) you’ll need to unfreeze your credit with the bureau before you will be able to do so. There may be costs involved with placing a freeze on your credit. Check with the credit reporting agencies (Equifax, Experian, and TransUnion) for more information.

For more information on our security practices and ways to protect your account, you can visit:

1 The report identifies tax season as Jan. 1 through mid-April. These numbers were reported as of March 5, 2016.

Betterment is not a tax advisor, nor should any information in this article be considered tax advice. Please consult a tax professional.

Recommended Content

View All Resources

If You Live In New Jersey, These Tax Rules Might Help You Save On Taxes

If you're a New Jerseyan, it’s important to be aware of certain tax rules so that you can save more of your hard-earned money.

How Does Betterment Calculate Investment Returns?

Understanding and using time-weighted and money-weighted returns within your Betterment dashboard.

What Should I Know About Taxes on My Investment Accounts?

An informed and educated investor can make better decisions if they know the unique tax attributes of each type of investment account.

Explore your first goal

Cash Reserve

Our high-yield account built to help you earn more on every dollar you save.

Safety Net

This is a great place to start—an emergency fund for life's unplanned hiccups. A safety net is a conservative portfolio.


Whether it's a long way off or just around the corner, we'll help you save for the retirement you deserve.

General Investing

If you want to invest and build wealth over time, then this is the goal for you. This is an excellent goal type for unknown future needs or money you plan to pass to future generations.

See details and disclosure for Betterment's articles and FAQs.