With the start of tax season, we have the opportunity for fraudsters to find creative ways to steal your 2016 federal or state income tax refunds.

You can take some simple steps to protect your identity and avoid a significant problem.

Taxpayer identity theft occurs when someone uses your stolen Social Security number to file a fraudulent tax return and claim a refund. You will likely have no idea this has occurred until you file your own tax return and IRS or the state department of revenue denies your refund because they believe you already received it.

There are some potential warning signs, including:

  • More than one tax return was filed using your Social Security number.
  • You owe additional tax, refund offset or have had collection actions taken against you for a year you did not file a tax return.
  • IRS records indicate you received wages or other income from an employer for whom you did not work.

There are some simple steps you can take to reduce your risk, including:

  • Always use security software with firewall and anti-virus protections. Make sure the security software is always turned on and can automatically update.
  • Encrypt sensitive files such as tax records that you store on your computer.
  • Use strong passwords. This is especially true if you are using an online tax service.
  • Learn to recognize and avoid phishing emails, threatening calls and texts from thieves posing as legitimate organizations such as your bank, credit card company and even the IRS. Do not click on links or download attachments from unknown or suspicious emails.
  • Protect your personal data. Don’t routinely carry your Social Security card, and make sure your tax records are secure. Treat your personal information like you do your cash and don’t leave it lying around.

The Internal Revenue Service has joined with representatives of the software industry, tax preparation firms, payroll and tax financial product processors and state tax administrators to combat identity theft refund fraud. The results have been encouraging.

From January through April 2016, the IRS stopped $1.1 billion in fraudulent refunds claimed by identity thieves on more than 171,000 tax returns.

For the same period in 2015, the IRS stopped $754 million in fraudulent refunds claimed on 141,000 returns. Better data from returns and information about schemes meant better internal processing filters to identify identity theft tax returns.

I am often asked if filing a paper tax return is safer than e-filing. Truthfully, e-filing is your safest option due to the data encryption and data validation that take place in the e-filing process. The less paper, the better.

Kenneth G. Vella is owner of KG Vella CPA. www.KGVellaCPA.com