How to Choose the Right Tax Professional To Prepare Your Taxes

If you're like most taxpayers, step one in the tax filing process is pulling together and organizing your tax records. The second step is to find someone to prepare your return.

Because of the increasing complexity of the tax laws, fewer and fewer people are trying to do their own taxes, so professional tax preparers seem to have all the business they can handle. If you're lucky, you have a reliable tax pro you use year after year. If not, you have to choose someone, and this is where you can run into trouble if you make a bad choice.

Check references

Before you visit a tax preparer, read your tax booklet, and collect any documents that might apply to your taxes, including last year's return.  Check out the preparer's qualifications and reputation. 

While most preparers provide good service, a few unscrupulous tax preparers file fraudulent tax returns and ultimately defraud their clients. 

Here are some tips to consider before hiring a tax preparer:

• Get referrals from satisfied clients.

• Ask the preparer about their training, experience, and current knowledge of tax law.

• Find out whether the preparer has ever represented taxpayers in an audit, or has ever been denied eligibility to do so.

• Consider whether the individual or firm will be around to answer questions about the preparation of the tax return months or even years after the return has been filed.

Tax evasion scams, including fraudulent tax return preparation, cost taxpayers billions of dollars every year. Eventually, the Internal Revenue Service (IRS) will uncover it.

Avoid scams

Dishonest tax preparers can commit fraud in a number of ways such as inflated personal or business expenses, false deductions, unallowable credits, or excessive exemptions on returns prepared for their clients.  Be sure to watch for any signs that the preparer may be less than honest. 

Some of the most common signs are:

• Claiming that they can obtain larger refunds than other preparers.

• Basing their fee on a percentage of the amount of the refund.  Fees should be based on the complexity of the return, never on the size of the tax savings or refund.

• Claiming they can get you immediate payment of your return.  Keep in mind that this is a loan, known in the trade as a refund anticipation loan. These loans carry very high fees and can take a significant chunk out of your refund.

• Refusing to sign the tax return or provide a copy for your records.  Always make sure you have something in hand that shows proof of what transpired and you should have a receipt for services rendered.

Also, keep this in mind. Even if you hire someone to prepare your taxes, you as the taxpayer are ultimately responsible for its accuracy. Be sure to double-check the figures and the social security numbers before the return is filed. And if there is something in the return you don't understand, ask the tax preparer to explain it.