What is child tax credit fraud and how to avoid it?

Are you eligible for a child tax credit (CTC)? When money is tight, government benefits like tax credits are quite helpful to families.

Now you might have heard about the child tax credit fraud. Victims of this scam didn’t receive their CTC automatically because someone has already claimed their check.

Like every scam, it can happen to anyone, so you might want to secure your child tax credit payments and not fall victim to these fraudulent activities. 

We looked into recent news about child tax credit scams because scammers are getting more creative in their tactics, so it pays to know what you’re up against. We also researched ways to keep your information secure online.

In this article, you can discover the best tip that could keep your personal information safe. Read until the end to avoid skipping any crucial methods, compromising your information, and losing your child’s tax payments to scammers.

What is child tax credit?

Child tax credit can reduce the federal tax you owe for each qualifying child below 18 years old. For a child to be eligible for CTC, here are the requirements according to the Internal Revenue Service:

  • Has a Social Security Number (SSN)
  • Below 18 years old at the end of the year
  • Your child, stepchild, eligible foster child, legitimate siblings, step-siblings, half-siblings, or a grandchild, niece, or nephew
  • Valid for employment and provides not more than half of their own financial support during the year
  • You and the child should have the same residence for more than six months
  • Your dependent, as stated on your tax return
  • Did not file a joint return or file it only to claim a refund of withheld income tax

The Child Tax Credit for 2022 is up to $2,000 per child. You can claim the full amount if your yearly income is not more than:

  • $150,000 if you’re married and filing a joint return, or filing as a widow or widower
  • $112,500 if you’re the head of the household
  • $75,000 if you’re married and filing a separate return or you’re a single filer

You can still be eligible for a partial refund if you have a higher income. Also, the American Rescue Plan allowed the IRS to send advance CTC monthly payments of up to $300 to eligible children and parents.

Indeed, scammers did not overlook this benefit, so they set up different techniques to perpetuate child tax credit scams.

How do child tax credit scams happen?

Fraudsters pose as IRS agents, sending emails, texts, and social media messages to unsuspecting parents. Sometimes, they also call to ask for personal and financial information, which some parents will gladly give, thinking these callers are from government agencies.

Victims also received emails containing links to official-looking websites. The phishing website will ask parents to disclose private information, and that’s one way for criminals to get your data.

Scammers also ask you to verify your child’s information, so they can use it when filing for a CTC. Parents then confirm the said details, fearing they won’t claim their child’s CTC if they don’t follow the caller’s instructions.

Here are some of the details CTC scammers often ask:

  • Social Security Number (SSN)
  • Your child’s name and birthdate
  • Your home and email address

They may also request bank transfers, payment by gift cards, or cryptocurrency, in addition to getting a CTC under your name. Cybercriminals even send voicemails to threaten parents, so they’ll disclose personal information.

So when it’s time to get their children’s CTC, victims will discover that someone has already received the benefits under their name.

Now, what triggers a tax credit investigation?

Your report of the CTC scam gives rise to a child tax credit fraud investigation, aside from criminal investigations initiated by the IRS.

Tax investigations will also happen if:

  • You declare an unusual number of deductions
  • You file late tax returns
  • Your tax returns are inconsistent
  • You misreported your income

So if you’re claiming a CTC but a criminal has already received it, the IRS will conduct a tax fraud investigation to know if you’ve been scammed and create a recovery plan for you.

What can you do if someone claims your child tax credit?

In case of a stolen child tax credit check, you must call 800-829-4933 immediately to inform the IRS of the incident. They can verify your report by tracing the check. If it’s indeed stolen, you can get your child’s CTC.

Here’s how to report child tax credit frauds:

  1. Call the tax fraud hotline at 1-877-438-4338.
  2. Fill out the IRS Identity Theft Affidavit, print it, then attach it to your return.
  3. Send it according to instructions.
  4. Go to IdentityTheft.gov to file a complaint.

The IRS will provide a personal recovery plan, guide you through each step, and track your progress.

5 tips to keep your information safe and prevent tax credit fraud

We compiled five tips to secure your information and avoid child tax credit fraud.

It’s important to have security measures in place, so your family can get the benefits you rightfully deserve.

1. Avoid clicking suspicious links or attachments from emails

Since the IRS will never send verification emails, you should not open links or attachments, even from official-looking messages.

To be safe, you can contact the tax fraud hotline we mentioned above to ask if the email is indeed from the IRS.

2. Install anti-virus software

You can also download anti-virus software that will notify you whenever you download a dangerous attachment or visit a malicious website.

It can serve as your first line of defense against phishing attacks and malware from hackers who want to get your child’s CTC.

3. Track your CTC check

Criminals can also steal your child’s tax credit check, so you should track it. Sometimes, missing checks are actually claimed by scammers.

You can visit the USPS website to know your check’s current location.

4. Report scammers who pretend to be IRS agents.

It’s important to report fraudsters who pretend to be IRS employees because chances are, they will try to scam you again using a different modus operandi.

If you suspect fraudulent activities, call the IRS at 1-877-438-4338 immediately.

5. Never respond to solicited communication.

If you receive an unsolicited call, text, or social media message from someone claiming to be from the IRS, ignore it.

According to the IRS, you don’t need to do anything to be eligible for CTC because they will automatically enroll you for payments. The IRS typically uses your information from the previous years and will not call or message you to verify anything.

IMPORTANT: The IRS will never call, text, or email you to ask about your personal information. If they need to contact you, they send a physical mail first.

Is it possible to prevent child tax credit fraud?

Although scammers employ different tactics to get your information, hack your device, or steal your check, there are helpful tips to avoid CTC fraud.

Remember that the IRS will never solicit information via text, email, or call. It’s also helpful to report scammers immediately, install anti-virus software, and track your CTC check’s location.

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