If anyone knows how complicated filing tax returns can be, it’s the IRS. After all, they make the rules! With that difficulty in mind, the agency recently emailed information about choosing wisely when selecting a tax preparer, and as a tax preparer myself, I strongly encourage this education. This is important, because no matter who prepares the return – even if it’s a professional – you are ultimately responsible for the facts it contains. Going with an incompetent or unethical preparer can land you in legal hot water, even if you don’t mean to commit fraud. So even if you are not fortunate enough to work with me, these tips can help you stay on safe ground when selecting someone to help prepare your taxes:
- Check qualifications: You can find qualified tax attorneys, CPAs, enrolled agents and seasonal tax workers in your area with the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications.
- Check their record: It’s a good idea to conduct a little background research. Look for licenses, disciplinary actions and other information through the Better Business Bureau, the appropriate State Board of Accountancy (for CPAs), the State Bar Association (for lawyers) or the IRS Directory (for enrolled agents).
- Look into fees: Be sure to ask about the fees that the tax preparer will charge. The IRS suggests avoiding those with fee structures based on a percentage of your refund and preparers who promise to get you more money back than their competitors.
- Request E-filing: If your preparer doesn’t offer this service, there’s a good chance they have very few customers.
- Check availability: Avoid tax preparers who close up shop and disappear after the tax return deadline. Check up on your preparer after April 18 to make sure he or she is still around to answer any additional questions you may have.
- Bring your documents: Always be prepared with your W-2, 1099s, receipts and other tax documents. Filing taxes for clients based on the year’s final pay stub is illegal, so don’t choose a preparer who is willing to do this. Your preparer should ask to see all the tax documents they’ll need to file a complete and accurate return.
- Don’t sign it if it’s not complete: You should never agree to sign a blank return, nor will a qualified and ethical preparer ask you to do so.
- Check your return before you sign it: Always review tax returns and be sure it’s accurate before you sign it and ask questions if there’s something you disagree with or don’t understand. Make sure any refund goes directly to you and not your preparer – verify the account numbers and routing numbers shown on your return.
- Make sure the preparer signs your return: The IRS requires the signature and Preparer Tax Identification Number (PTIN) of paid tax preparers on completed returns.
- Report a dishonest preparer: If you suspect your tax preparer is dishonest, inform the IRS using Form 14157 and use Form 14157-A to report a preparer who you think may have filed or changed your return without your permission.
- Direct deposit: If you are getting a refund and your return is being prepared by a professional, always make sure your refund is direct deposited into your account, not their’s (refer to #8). An easy scam is when the preparer has the refund direct deposit into their own account to “cover fees,” then they change the return and increase the refund without telling the taxpayer.
Don’t be overly concerned, because most tax preparers are honest and do a good job for clients. But it never hurts to do your due diligence. Remember, when it’s all said and done, you are legally liable for your return.