Imagine that you’re entering the home stretch of your career. Preparing for retirement, you’ve decided not to claim your Social Security benefits at age 62 (the earliest age at which you can collect). You’re 64, 65, or older, and you’re waiting as long as possible to claim those benefits, so that you can reap a bit more each month.
Then, one day you receive a 1099 tax form in the mail. It appears that you owe taxes on your Social Security benefits, which were claimed at some point in the previous year… But you know you didn’t do that! What happened?
Unfortunately, Social Security fraud is on the rise. If a thief gains access to your Social Security number, he or she might figure out how to file for benefits under your name. Now, not only has someone collected your benefits, but you owe taxes on part of the amount as well (because you were still working)!
Thieves often get away with these schemes, because the deception flies under the radar until the following spring when it’s time to file your taxes. And because retirees often move shortly after ending their careers, the Social Security Administration does not always suspect foul play when asked to send benefits to a post office box or even a prepaid debit card.
With Social Security theft becoming so common, the Administration is busily working on methods to detect fraud more quickly. In the meantime, there is one very important thing you should do: Watch your mail!
If your benefits are claimed, Social Security should send you a notice. Unfortunately we sometimes overlook these notices or forget to open them. So, always open all mail from the Social Security Administration right away.
If it appears that someone has claimed your benefits, immediate action is much more effective at undoing the damage. Report the problem to your local Social Security office immediately, and call the IRS as well. Then, check your credit report with all three major credit bureaus, because you’re now at increased risk of other forms of identity theft.
Most of the time, you can prevent identity theft by exercising extreme caution with regard to your personal information such as your Social Security number. Also remember to continue meeting with us regularly, so that we can keep an eye on your financial outlook and offer advice for keeping yourself safe.