O’Connor: Want to avoid tax hackers? Keep your cash

Brian J. O'Connor
Detroit News Finance Editor

Most of us really, really hate filing our taxes in this country. According to one survey, 55 percent of men would rather watch three romantic comedies than have to do their taxes, and 66 percent of women would rather admit they were wrong in an argument than deal with their 1040s.

I’ll bet if you gave them the choice, most Americans would give up wrangling with W-2s and tax tables in exchange for attending a professional soccer game where the halftime entertainment was a showing of “50 Shades of Grey” and the snack bar served nothing but kale.

But somebody out there loves filing taxes, and tried to file about 220,000 returns last year to fraudulently claim $50 million in refunds. That sounds impressive, but it works out to just $227 per return. For that much, I could just take back all the returnable cans in the basement.

Shun that refund

According to the IRS, it’s now found that the hackers viewed 220,000 earlier tax returns and used the Social Security numbers and other information to file phony returns and claim bogus refunds. They tried to breach another 114,000 returns, but failed.

For the taxpayers whose returns were targeted by hackers, the IRS will allow them to set up a PIN so that only they can file a return in their name. Taxpayers who’ve been victimized by identity theft or subjected to a breach of personal information also can file Form 14039 Identity Theft Affidavit to apply for a PIN. The rest of us, however, are out of luck.

Taxpayers who suffer from spoofed returns have to file all kinds of paperwork, submit a hard copy of their returns, and can end up waiting several months for a refund. If you’re planning on using that money to pay bills or meet some big annual expense, such as property taxes, you’re out of luck.

But there is one sure-fire way to make sure you don’t have to wait for your money in the event of a hack attack — don’t get a refund.

Stash that cash

There aren’t a lot of good reasons to get a big tax refund, but in today’s low-interest rate environment you’re not losing much money, if any, by giving Uncle Sam an interest-free loan for a year. Plus, it’s convenient and a pleasant surprise to see just how much you get back — kind of like Christmas in April.

That is, until your return gets hacked. So if you know you’ll need the money and can’t afford to wait months, apply a little effort now and you can foil the hackers and be sure to have the cash when you need it.

First, get your last pay stub and last year’s return and hit the very handy-dandy withholding calculator at www.IRS.gov. Use your old return as a guide to estimate your deductions, figure out how much tax you’ll owe and adjust your withholding accordingly. The calculator even tells you how to fill out your new withholding Form W-4.

Now, set up a separate savings account, either in real life or at one of the online banks that may pay you a whopping 1 percent interest. When your next paycheck comes, have the extra cash directly deposited to the savings account. Set that up to happen automatically every time you get paid.

You don’t see that money and you won’t miss it, plus the cash is available right away when you need it. Yeah, you don’t get the thrill of seeing how big your tax refund is, but you also miss out on the potential stress, worry and problems of coming up short on cash. When it comes to taxes, the less excitement, the better, even when that’s as boring as European football, bad erotic romances and salad that tastes like lawn clippings.

Brian O’Connor is author of the award-winning book, “The $1,000 Challenge: How One Family Slashed Its Budget Without Moving Under a Bridge or Living on Government Cheese.”


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Twitter: @BrianOCTweet