Many taxpayers look to a professional when it’s time to file your income tax return. After all they are being trusted with your family’s personal information. Your private financial details plus personal information on your children and/or dependents like Social Security numbers, birth dates and school or childcare. There are many tax preparers that provide excellent ethical services for their clients and have extensive knowledge on tax issues. Furthermore, they have to follow IRS standards, requirements and continuing education. Even if you prepare your own income tax forms, you are still legally responsible for what is on it.
Often taxpayers will use preparers who don’t understand taxes or who mislead people into taking deductions they aren’t entitled to in order to increase their fee or promise a large refund to the client. Taxpayer’s can be have serious financial issues because they had the wrong income tax return preparer.
Each year, tax preparers can be faced with penalties and/or even jail time for defrauding their clients. It is very important to choose wisely for the person who will prepare your income tax return.
Here are a few tips to keep to think about when making that decision:
- Check to be sure the professional has an IRS Preparer Tax Identification Number (PTIN). Anyone with a valid 2015 PTIN is authorized to prepare income tax returns.
- Ask the tax preparer if they have a professional credential (enrolled agent, certified public accountant, or attorney), or attend continuing education classes. A number of tax law changes, including the Affordable Care Act provisions, can be complex. A competent tax professional needs to be up-to-date in these matters.
- Check on the service fees upfront. Avoid preparers who base their fee on a percentage of your refund or those who say they can get larger refunds than others can.
- Always make sure any refund due is sent to you or deposited into your bank account. Taxpayers should not deposit their refund into a preparer’s bank account.
- Make sure your preparer offers IRS e-file and ask that your return be submitted to the IRS electronically. Any tax professional who gets paid to prepare and file more than 10 returns generally must file the returns electronically. It’s the safest and most accurate way to file a return, whether you do it alone or pay someone to prepare and file for you.
- Make sure you’ll be able to contact the tax preparer after you file your return – even after the April 15 due date.
- Good preparers will ask to see your records and last year’s return if you are a new client. They should ask questions to determine your total income, deductions, tax credits.
- Never sign a blank return. Don’t use a tax preparer that asks you to sign an incomplete or blank tax form.
- Before you sign your tax return, review it and ask questions if something is not clear. Make sure you’re comfortable with the accuracy of the return before you sign it.
- Make sure the preparer signs and includes their PTIN. Paid preparers must sign returns and include their PTIN as required by law. The preparer must also give you a copy of the return.
- Report an abusive tax-preparer to the IRS. You can report abusive tax return preparers and suspected tax fraud to the IRS. Use Form 14157.