Beware of Bad Tax Advice and Unreliable Return Preparation
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We have all heard the saying that if it sounds to good to be true, it probably is. Well, this saying certainly can apply to tax preparation. Be an informed consumer when selecting a tax preparer. Going to an inexperienced or unethical return preparer can hit you in your pocket book. Filing returns with inflated deductions or credits can result in you owing back taxes, interest and penalties.
Does the tax preparer who prepares your return refuse to sign your return, but expect you to pay for preparation? Paid preparers are required to sign returns they prepare. A paid preparer who won't sign a return is not reliable.
Does your return preparer encourage you to claim deductions that you have never heard of before or encourage you to inflate deductions? While it is possible that there are deductions you haven't heard of, it is always a good idea to question your preparer about something with which you are unfamiliar. Your preparer should be able show you an IRS publication that discusses the deduction or other item. If they can't or won't or if your preparer encourages you to make up or inflate deductions, take your business elsewhere.
How do I find a reliable tax preparer? Most people go to tax preparers because the tax laws can be difficult to understand. Make sure your tax preparer is qualified. Currently, there are no laws requiring tax preparers to take educational courses, be certified or licensed.
Some questions you should ask are:
- How much will the tax return cost?
- What type of tax training did the preparer take?
- Has the preparer taken continuing tax education classes?
- Does the preparer sign the returns?
- Will the preparer help with an audit or IRS questions?
If the preparer can't or won't answer your questions, go somewhere else.
How many allowances have you been told to claim on your W-4? If you claim too many, you could get into trouble with the IRS. Ignore people who say everybody claims "nine" allowances. If you claim too many allowances you could end up owing taxes. Claim only the allowances the W-4 instructions tell you to claim. For help in filling out your W-4, go to the Internal Revenue Website at www.irs.gov. There is a withholding calculator you can use to calculate how many dependents you should claim.
To use the calculator you will need:
- Estimates of your yearly child care expenses;
- Your latest pay stubs; and
- Your spouse's pay stubs if you are filing taxes jointly.
Is your tax preparer offering you a fast or quick refund? A tax preparer, who says you can get a refund in as little as three days, is probably offering you a refund anticipation loan. This is an expensive loan that charges you fees and interest to borrow your own money. You can file your return electronically and have it deposited directly into your bank account. You can get your refund in as little as 10 to14 days.
Can I get my taxes done for free? Low-income taxpayers may be able to go to a local Volunteer Income Tax Assistance Site (VITA) or AARP free tax preparation site. These sites usually operate between the end of January and April 15 each year. The number to find a VITA site is 1-800-829-1040. The number to find an AARP site is 877-227-7844.
Where can I get help if I am being audited by the IRS or need help with a tax controversy? You may be able to get help from Iowa Legal Aid's Low-Income Taxpayer Clinic. Call Iowa Legal Aid at 1-800-532-1275.
If you have concerns regarding your current tax preparer or prior year returns, contact Iowa Legal Aid's Low-Income Taxpayer Clinic at 1-800-532-1275.
As you read this information, remember this article is not a substitute for legal advice.
As a general rule, Iowa Legal Aid’s Low-Income Taxpayer Clinic does not prepare tax returns.