Too frequently there are data breaches that result in customers having their identity stolen. These data breaches can directly impact your business or individual taxpayers with significant losses.
What is a data breach? A data breach is when unauthorized individuals “hack” into organizations and harvest personal information as passwords, credit card information, and social security numbers. Typically, data breaches have happened to retailers as Target and second parties that gather information like Equifax. Even the U.S. government has experienced data breaches in the past.
Typically, if a business has a data breach and identity theft happens to customers, they will inform customers and give them a period of identity protection. This is done at the expense of the business and free of charge for the customer. As data breaches and identity theft have become more common, victims can seek tax relief. The IRS has recognized the impact of identity theft on taxpayers and has become more sympathetic. Having the IRS recognize identity theft is a problem for taxpayers. The IRS has changed tax codes to reflect this issue.
Taxpayers that have experienced identity theft can deduct losses they have suffered. Bear in mind tax laws are different for business and individual taxpayers. Sec. 165(a) will let individual taxpayers deduct any losses that occurred during the year. Businesses as partnerships, sole props, and corporations can deduct losses under Sec. 162(a) that caused a data breach or identity theft. If you or your business has experienced identity theft it is advisable to seek a tax accountant for guidance. They will be able to help you with claiming losses and navigating tax laws you may not be familiar with.
To protect yourself and your business from identity theft can do the following: 1. Have unique and different passwords for your smartphone, email, and online banking for example. The more unique and stronger your password the better. 2. Be careful what websites you visit and links you click when online. If the website looks strange or too good to be true say away. 3. At least once a year get a free credit report through AnnualCreditReport.com. If something is wrong you can fix it before it impacts your credit and ability to buy a house or car. 4. Do not freely give out your personal information over the phone. If someone suspicious asks for your personal information hang up.
Data breaches and identity theft are something that cannot be completely avoided but you can be proactive about protecting yourself. If you are unfortunately a victim of identity theft take action today. Don’t wait tomorrow. SWVA tax accountants can help you with identity theft deductions. We are here to help you with all your tax needs. Don’t hesitate to call or book an appointment online today with SWVA Tax Accountants. We’ll run the numbers, you run the business! Visits us at https://www.swvatax.com/ for your tax needs.