Online Tax Prep and Filing: How to Keep Yourself Safe

The proliferation of software and online services that can prepare and even file your taxes have simplified the process for taxpayers. But just like everything else you do online, how can you be sure it’s truly secure?

Your taxes involve every aspect of your financial life. The last thing you want is to make yourself vulnerable to crooks and hackers when submitting this information. If you plan to file online or use tax prep software, heed these six tips first.

1. Find a trusted partner.
   The IRS gives you a direct portal for filing taxes online with E-file. It’s free, fast and secure. But if your financials are a little more complicated, and you plan to use preparation software, make sure to pick one that’s trusted and safe. Name brands you recognize that have good reviews from reputable websites are usually a good bet. Freeware and ad-supported software probably aren’t. When in doubt, ask your friends or financial advisor.
   
   
2. Use unique, secure passwords.
   As always, it pays to have unique, complex passwords. We never advise using the same password for multiple accounts, so pick one that’s unique to the tax prep service you choose. Some good rules of thumb: Don’t use complete words in English or any other language, even if you use letter substitutions (like ‘3’ for ‘E’ or ‘1’ for ‘I’). Hackers often run programs that can figure them out. Instead, pick a phrase or song lyric you can remember and use the first letter from each word, along with numbers and symbols.
   
   
3. Do everything over a secure connection.
   Don’t do anything important, including financial business and taxes, on open public Wi-Fi. They are not secure, and hackers can very easily access your device. Instead, wait until you’re on your home network – as long as it’s secure, too. Install internet security software on your computer – again, from a trusted company, not freeware. And, if possible, install a firewall on your home network as an added layer of security.
   
   
4. It’s tempting to use a smartphone, especially for simple filings, but computers are better.
   As tax prep software gets better, and phones get more powerful, many companies are offering tax prep and filing on mobile devices. It may seem easier and more convenient, but phones are just too susceptible to tampering to ever be truly secure. If you have access to a laptop or desktop computer on a secure network, opt for that instead.
   
   
5. Only use websites with encryption.
   Not all website security is created equal. The gold standard for website encryption is Secure Sockets Layer (SSL). That sounds like technical jargon, but it’s easy to tell which sites have it. They will begin with “https” instead of just “http” and will display a little padlock icon next to the website address in your browser. Only do private business on websites that offer this layer of security.
   
   
6. Keep records – but safely.
   Just because you’re preparing and filing your taxes online doesn’t mean you can’t also have a paper trail. Keep any documents the software gives you, as well as all confirmation messages and even screenshots, if necessary. Back them up to a secure hard drive or print them out and file them away. You might even consider filling out paper forms along with your prep software and keeping those on hand, too. If anything happens to your filing, you will have paper to back up your work. And if you throw anything away, don’t forget to shred it first.

Are your taxes complicated? Are you uncomfortable trusting them to tax prep software? Then don’t take any chances. Talk to a CPA and get some human help. And as always, if something seems too good to be true or comes to you from a source you don’t recognize, don’t chance it. Go with what you know, who you trust and what feels safest to you. And when in doubt, go offline and do them the old fashioned way.