Choosing a Tax Return Preparer

A new year is here! With the holiday season behind us, it is time to start preparing for tax season. Now is the time to start thinking about who will be preparing your return. If you have decided to hire someone to handle this task, it is important that you take the time needed to make a wise choice. Remember that even if you hire someone to prepare your return, you will be fully responsible for everything reported on the return.

When choosing a tax return preparer, you need to be on the lookout for certain red flags. Below are some tips to help you choose a reputable tax preparer and some of the more common red flags.

1. Check the preparer’s qualifications, credentials and history. The IRS has a directory of preparers and their qualifications. Look for disciplinary proceedings with state licensing agencies, and online reviews. Beware of preparers who:

-Have no office location and volunteer to prepare your return in your home or  office

-Regularly change their office location

-Regularly change their telephone number

2. Ask about fees at the outset. Beware of preparers who:

-Will not discuss, or will not clearly state, the amount of the fee to be charged

-Require cash payment for fees

-Refuse to provide a receipt for services rendered

-Charge a percentage of the refund amount

-Represent that they can you get you a large refund

3. Make sure the preparer requests your books and records, and asks you for information in order to prepare your return. Beware of preparers who:

-Fabricate income in order to claim credits for which you do not qualify. Education credits are a particular favorite of unscrupulous preparers

-Claim false/inflated deductions to increase the amount of the refund

-Tell you that everyone does this or that the IRS is not going to catch you

4. Make sure the preparer allows you the opportunity to thoroughly review the return prior to its filing and is available to answer any questions you have regarding what has been reported on the return. You should not sign the return until you are satisfied that the return is accurate. Remember that it is your responsibility to carefully review the return for accuracy. You will be liable for any taxes, penalties and interest owed on the return, even if the information was falsely entered by the preparer. Beware of preparers who:

-Ask you to sign a blank tax form

-Cannot, or will not, fully explain what has been claimed on the return

5. Make sure that the preparer signs the return, and includes his/her PTIN. The law requires anyone who is paid to prepare a federal tax return or who assists in preparing a federal tax return to have a PTIN (preparer tax identification number). The paid preparer is required to sign the return and include the PTIN. Beware of preparers who:

-Refuse to sign or include their PTIN on a return. These preparers are referred to   as ghost preparers and the IRS regularly issues warnings against the use of  these individuals

6. Make sure the preparer electronically files the return unless there is a specific reason why the IRS will not accept an electronic return. Beware of preparers who:

-Refuse to electronically file tax returns without a valid reason

-Refuse to sign and enter their PTIN on an electronic return

-Require you to print out and mail in a paper copy of the tax return to the IRS

7. Make sure that the preparer uses your bank account information for directly depositing tax refunds and that the full amount of the refund is coming to you. If you have reached an agreement with the preparer regarding the refund, make sure the refund is directed in accordance with the terms of the agreement. Beware of preparers who:

-Have tax refunds directly deposited into their bank account and then issue you a  check for the refund

8. Make sure that the preparer will be available in the future. It may take a few years for the IRS to question the accuracy of the return. You want to choose a preparer who will be available to answer questions about the return.

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