If you pay someone to do your taxes, choose wisely. Find a qualified and honest tax return preparer because you, not the preparer, are responsible for everything on your tax return.
Most preparers ask multiple questions to find your total income, filing situation, expenses, deductions and credits correctly. Your preparer will also want to see your records, income statements, identification cards and receipts. Your preparer does this to help you avoid paying penalties, interest or additional taxes when IRS later checks your tax return.
Most preparers are honest and provide excellent service. But, some prepare and file false income tax returns. For example, some preparers change the income or expenses to claim the largest amount of Earned Income Tax Credit or EITC. Sometimes you don't know the preparer put the false expenses, deductions, exemptions or credits on the return but you still have to pay it back.
To protect yourself, pay the correct amount of tax and get the credits you earn, follow these tips:
- Never sign a blank tax form.
- Review your return before you sign and ask about anything you don't understand or doesn't seem right.
- Make sure your paid preparer signs the return and gives you a copy.
- Follow these tips for choosing a tax preparer:
- Know the total cost. Be cautious of tax preparers who claim they obtain larger refunds than others do. Avoid preparers who guarantee a refund or base their fee on a percentage of the refund.
- Plan ahead. Choose a preparer or firm who is around to answer questions about your tax return after April 15 or for a few years.
- Determine your needs. Does your state have licensing or registration requirements for paid preparers? Is your preparer an Enrolled Agent, Certified Public Accountant or Attorney? If so, the preparer can represent you for audits, collections and appeals. Other return preparers can represent taxpayers in audits only if they signed the return as a preparer.
- Research. Check if the preparer has a questionable history with the Better Business Bureau, the state's board of accountancy for CPAs or the state's bar association for attorneys. Find out if the preparer belongs to a professional organization that requires continuing education and holds them accountable to a code of ethics.
Report suspected tax fraud and abusive tax preparers to the IRS on Form 3949-A, Information Referral or by sending a letter to: Internal Revenue Service, Fresno, CA 93888.