As tax season approaches, you may race to hire a tax preparer in order to file your tax returns in time. But in your haste, make sure you don’t choose a tax preparer who is ready to scam you out of your hard-earned money. You may end up paying more money that actually required in your returns. In order to prevent such scams you must be aware of the six things that tax preparers will hide from you.
What The Tax Preparer Hides From You
The following are six things that your tax preparer will keep hidden from you, in order to scam you:
How qualified they are
It is not hard to become a tax preparer, as you do not require any formal education or experience. This is fine as long as your tax preparer atleast knows his matter. If your tax preparer is unaware of most tax terminology or his knowledge is outdated, it could create a problem for you.
You need to check whether your tax preparer has taken any exam to qualify and how long he has been working. It is best to stick to tax preparers who are certified public accountants, agents of the Internal Revenue Service or trained volunteers with the Volunteer Income Tax Assistance or AARP Tax Aide.
The fact that it is easy to do it on your own
Sometimes you hire a tax preparer because you feel filing tax returns will be a complicated process. You may also be scared that you may not include all your information and thus lose out on your valuable money. The fact is that you can actually handle tax returns on your own if you are good at math and have a steady income.
You can always refer to the Internal Revenue Service department’s website, to know what all tax deductions and credits you can avail. For more information, there are also tax manuals and information online, that will help you know what expense you can claim. You can also choose from various kinds of tax software to help you file returns.
How much you should pay them
You should always discuss the payment terms beforehand itself to avoid paying a high fee for your tax preparers. Your tax preparer will either you charge by the hour or will ask for a basic fee before the process. Depending on what returns you are filing, you can be charged anywhere from $150 to $1,000. If your tax preparer quotes a higher price that this, you need to look elsewhere nay be wary of any add-ons that he may try to charge along with his fees.
You can get free tax preparation help
Yes, you heard that right. You can actually get free assistance with your tax returns in the form of Volunteer Income Tax Assistance volunteers. But you can only avail their services if you are over 65, earn less than $53,000 annually, have any disability or are not able to speak English properly. Volunteers from AARP Foundation’s Tax-Aide program will also help you file your returns but again they mostly deal with people who are slightly older.
Free tax preparation products may cost you more
Your tax preparer may recommend a few free tax preparation products to help make filing your tax returns easier. While this may be free initially, most of these products will eventually require upgrades and you may end up paying massive amounts. It is best to use only a tax preparation product if it is up to date.
Get your refund without paying high fees
If you are expecting a tax refund from your returns, most tax preparers will suggest taking a refund anticipation loan from them. This means that if you require the refund immediately, they will give you a part of the expected amount and you have to pay it back to them with interest.
Often the interest charged is very high on such refund loans and you may end up paying a massive amount, if you are not able to pay the amount back in time.
It is better to wait for your refund as it generally comes within 21 days or you can have the Internal Revenue Service deposit the amount directly into your checking account.
So, now that you know the possible scams that some tax preparers may pull off, it is best you stick to the more qualified and well-known ones. You can always just do a bit of research and use the Internal Revenue Service department’s website for information to file the tax returns yourself.
BHATIA & CO, INC, CPAs