“My SSN has already been used on a tax return and I can’t e-file. What should I do?” Today we are going to discuss what to do if you are so unlucky as to be faced with this problem.
You prepare your tax return. You clear all the e-filing reviews, click on the FILE NOW button, and you are done.
Or so you think.
A few minutes later:
“Your electronic filing was rejected by the IRS” says an email in your inbox “Your Social Security Number (SSN) or the SSN of someone listed on your tax return has been used on a previously filed tax return.”
What is going on?
Potential reasons why your SSN has already been used:
- You entered the wrong SSN on your tax return: a case of fat fingers, digits transposed, a small error can result in an electronic filing error. The first thing to do: check that you have entered every SSN number correctly. Let’s assume it was not your mistake.
- Someone else entered the wrong SSN on their tax return: incredibly, you are not the only person filing taxes with dyslexia or fat fingers. Other people make mistakes too! Unfortunately, these errors sometimes bypass the IRS filters, and the electronic file goes through and is accepted. Ugh, disappointing.
- One of your dependent children incorrectly filed as an independent taxpayer: as children grow up, some work part-time and make small amounts of income, and they may need to file their own tax returns. The most common reason they will file is to get their tax withholding back. It is possible that your child proudly filed their own tax return, but forgot to check the “dependent of another” box on it. Unless your child provided more than half of their own support with their own resources, they are your tax dependent, and they are not eligible to file a tax return as an independent taxpayer. If they do, and you later file claiming them as your dependent, your tax return will be rejected. It happens….
- You are divorced, and your divorce agreement releases the child dependency to you, but your ex-spouse files before you, and they claim your child. Ugh again. This is not uncommon. Unfortunately, it happens to many divorced parents. In years with stimulus checks at stake like in 2020, it appears to be happening a lot more.
- A scammer impersonated you to claim a phony refund, or a phony stimulus check, by filing a fraudulent tax return.
Is there more tax return fraud this year?
There are no statistics that I am aware of yet, but there were incentives for fraudulent activity due to the three separate individual Economic Impact Payments, commonly referred to as Covid stimulus checks or covid tax relief that could add up to as much as $3,200 per individual. That’s quite a bit of change, so it would not surprise me if we eventually find out that this type of fraud was disproportionately higher this year.
What is one to do when this happens? How do you remedy the unauthorized use of your SSN on a tax return?
- Call the IRS: the first thing to do is to find out if the unauthorized use of the SSN was fraudulent or due to an error. You can call the IRS to ask if the use of your SSN was accidental and the IRS failed to flag the error, or if it was used on a false tax return filed by a third party impersonating you to direct a fraudulent refund or stimulus check to a false address. To prepare for the IRS call, know that:
- The IRS customer service representative answering the phone will need to verify your identity. They will ask you questions about prior tax returns filed by you and your personal information to confirm that you are you. Have a copy of your 2019 and 2018 tax returns with you when you call for this purpose.
- Be prepared to wait. IRS calls wait times can sometimes exceed an hour. Call at a time when you can wait on hold for a while. Do not call when you are in a hurry!
- Contact the IRS at one of these numbers: If you live abroad: +1.267.941.1000. This is the number for international taxpayers. Americans living abroad are considered international taxpayers. If you live in the USA: +1.800.829.1040
- If you owe 2020 tax: file an extension request and pay your estimated tax balance. We are close to the filing deadline and SSN errors or fraud take a long time to resolve. To avoid accruing penalties and interest until you are able to file, request an extension of time to file and pay your expected tax balance now. This gives you extra time until October 15th to solve the issue without having to worry about penalties. Even when tax returns are rejected, it is usually possible to file extension requests online. If the electronic extension request gets rejected, file it by snail mail and send a check with the payment or pay online. Mail the form to the relevant location for your situation as explained on page 4 of the Form 4868 filing instructions. If you prefer not to mail your check, you should be able to pay your estimated tax balance via Direct Pay.
- If the use of your SSN was fraudulent: you should take additional steps to protect your identity, including obtaining an Identity Protection PIN from the IRS to prevent scammers from using your SSN again; protecting your credit by setting up a credit freeze or monitoring with the three credit bureaus; and filing additional IRS forms. The IRS provides detailed information about what to do in the case of tax identity theft on their Taxpayer Guide to Identity Theft.
- File your tax return by mail: if the unauthorized use of your SSN was accidental, you will need to print, sign and mail the paper return to the IRS. Then wait until the IRS sorts out the error in their system and processes your paper filed return. This will not happen quickly. It could potentially take more than a year, due to the IRS processing backlog related to the pandemic, but it will eventually get resolved. If the use of your SSN was fraudulent, you will need to attach Form 14039 – Identity Theft Affidavit to your paper return when you mail it.
I hope you do not have to navigate the inconvenience of unauthorized use of your SSN. But if you have to, or someone you know has to, I hope this information helps you.
With this, we come to the end of this issue of CBP. Take good care of yourself and your loved ones, and see you in our next letter.
If you haven’t already subscribed to our newsletter to stay up to date with tax news, please do so. There’s always something new coming down the pike!
Un abrazo y buena onda,
Marina