Tax Tips: How Taxpayers can Protect their Data this Season

Tax season is a busy time for cyber crime. With so much high-value data moving between taxpayers, accountants and government systems – and filers often feeling stressed, anxious and confused – scammers know it’s a time when many people let their guard down.

While tax scams take many forms, the real goal is almost always the same: gaining access to your personal and financial information. Once criminals have that data, they may attempt to steal your refund, access your accounts or commit identity theft.

The good news? A few smart data protection habits can go a long way toward keeping your tax return – and your personal information – out of the wrong hands.

Why tax season is prime time for cyber crime

Tax season is one of the busiest times of the year for cyber criminals. When millions of individuals are sharing sensitive financial data online, scammers see an opportunity to take advantage of confusion and urgency.

Several factors make tax time particularly attractive to scammers:

• A lot of information is changing hands. Preparing a tax return involves sharing some of your most valuable personal details: Social Insurance Numbers, bank account details, income statements and more. This information may be sent between taxpayers, accountants, tax software platforms and government systems. Each transfer creates another opportunity for scammers to intercept data if security practices are weak.
• It’s a high-stress time. Taxes can be complicated, and many individuals worry about making mistakes, missing deadlines or owing money. Scammers often exploit this anxiety by sending urgent messages claiming there’s a problem with your return or that immediate action is required.
• People are expecting communication. During tax season, it’s normal to receive notices about assessments, refunds or missing information. Scammers take advantage of this expectation by sending fake emails, text messages or phone calls that appear to come from government agencies or financial institutions.

Why data security matters when filing your taxes

The personal information contained within tax documents is extremely valuable to criminals. Unlike a password that can be changed, details like your SIN, address and financial history are long-lasting identifiers.

This means that if scammers get a hold of your tax information, they may be able to access your accounts, impersonate you or file fraudulent returns in your name.

Protecting your data during tax season is therefore about more than a single refund – it’s safeguarding your long-term financial security.

What happens if a scammer steals your tax information

The effects of tax-related fraud can sometimes take time to resolve. Depending on the situation, it could lead to issues such as:

• Identity theft: Criminals can use your personal information to open credit accounts, apply for loans or commit other forms of fraud in your name.
• Stolen refunds: In some cases, scammers may file fraudulent tax returns using stolen information and redirect the refund to their own accounts.
• Long-term financial headaches: Recovering from identity theft can take months or even years, involving credit monitoring, fraud investigations and restoring compromised accounts.

What not to do during tax season

Even small oversights can make it easier for scammers to access your information. Avoiding a few common mistakes can significantly improve your data security.

• Don’t send sensitive documents through unsecured email. Tax documents often contain SIN numbers, banking details and financial records. Sending these through standard email can expose them to interception. Instead, use secure file-sharing portals or encrypted platforms recommended by your accountant or financial institution.
• Don’t click links in unexpected messages. Emails or text messages claiming to be from government agencies or financial institutions may contain links directing you to fake login pages or malicious websites. If you receive an unexpected message, avoid clicking any links. Instead, log in directly to your account or contact the organization using the phone number or email listed on their official website.
• Don’t download tax software from unknown sources. Only use reputable tax preparation software from trusted providers. Downloading software from unofficial websites could expose your computer to malware designed to collect data.
• Don’t share sensitive information with unsolicited callers. If someone contacts you claiming to be an official government or bank representative and asks for sensitive information, take time to verify their identity before responding. Keep in mind, legitimate organizations will not pressure you into providing information immediately.
• Don’t access financial accounts on public Wi-Fi. Public networks at cafés, airports or hotels may not be secure. Cyber criminals sometimes monitor these networks to intercept data. When accessing financial accounts or filing taxes online, use a trusted, private connection.

Data protection checklist to prevent tax fraud

A few proactive steps can significantly reduce the risk of tax-related fraud. Use this checklist to help protect your personal and financial information during tax season:

• Use secure file-sharing methods when sending documents to accountants or tax preparers. Encrypted portals are safer than email attachments.

• Avoid public Wi-Fi when accessing financial or tax accounts.

• Use strong, unique passwords for tax software, government agency accounts and financial platforms. Password managers can help generate and store secure credentials.

• Keep your software updated. Updates often include security patches that close vulnerabilities cyber criminals know how to exploit.

• Verify websites before entering information. Carefully check the URL and bookmark trusted sites for when you need to revisit them.

Tax season may be unavoidable, but falling victim to a scam doesn’t have to be. By staying alert, verifying communications and using secure methods to share financial information, you can significantly reduce the risk of fraud. A few simple habits can go a long way toward keeping your tax return and your identity safe.

For more tips and resources on keeping your digital and physical data secure, bookmark and visit RBC’s Cyber Security Hub

FAQ