Taxes are difficult, and it is the complexity that propels many taxpayers to seek specialized assistance from tax preparers. However, since the business is lucrative enough, the chances of unluckily landing and hiring a lousy and unethical tax preparer are high; this can easily raise the risk you facing an ugly tax audit later.
With over 60% of overall tax returns preparations being handled by tax preparers, you must be very careful when hiring them and watch out for danger signs of a phony “tax pro.” There is a lot of money involved with taxes and very stringent tax laws that the IRS officials would like to head straight to the courts and have you prosecuted to not only teach you a bitter lesson, but also have you serve as an example to others who might be toying around with the idea of mutilating their taxes.
You just cannot afford mistakes like having excess exemptions, overlooking and failing to claim legitimate tax credits, and failing to note tax deductions which can save you lots of money. These mistakes might not be committed by you, but you take full responsibility since you are the one that signs all the tax forms. To ensure that you evade the raw tax preparation deals, you need to stay alert and watch out for the following key indicators of a not-so-competent tax preparer. Always, hire a licensed individual, not one who promises you heaven but has not ability to even offer hell.
1. Promises Huge Refunds: Everyone wants some refunds; that is a fact. However, as a marketing strategy, the fraudsters will passionately and assuredly promise you massive refunds even before peeking at your tax documents. These breed advertise and promise the impossible, don’t fall for the tempting offers. They might play around with the numbers on your return to come up with huge payouts, but think about the IRS reviews later and consequences.
2. Lack of Proper Credentials: Is your tax preparer competent and can that be proven? The IRS assigns every qualified tax preparer a Preparer Tax Identification Numbers (PTINs). You are likely courting problems with the taxman if your preparer doesn’t have the PTINs, demand to see it.
3. Refunds Not Deposited into Your Bank Account: Your refund is your money, and must be deposited into your account. Any other destination that doesn’t have your name on it as might be suggested by your preparer is a red flag!
4. Wants a Percentage of your Refunds as Fee: Depending on the scope and size of your tax return, decent tax preparers charge a flat fee for all services, and not some percentage of your returns. Those who prefer to go the percentage way will do anything to pump up the refund by even mishandling of financial information.
5. Review the Specialist: Before you let some stranger manage your documents, take some time to check out with the local Better Business Bureau. Avoid anyone with a tainted record, however promising he or she might be.
You can steer clear of trouble by avoiding the incompetent tax preparer. There are so many decent tax preparers out there, don’t be fall for the fake ones.