If you pay someone to prepare your tax return, choose that preparer wisely, says the Internal Revenue Service.
Taxpayers are legally responsible for what's on their own tax returns even if prepared by someone else, so it is important to choose carefully when hiring an individual or firm to prepare personal returns. Most return preparers are professional, honest, and provide excellent service to their clients.
Here are a few points to keep in mind when someone else prepares your return:
- Be cautious of tax preparers who claim they can obtain larger refunds than other preparers.
- Avoid preparers who base their fee on a percentage of the amount of the refund.
- Use a reputable tax professional who signs your tax return and provides you with a copy for your records.
- Consider whether the individual or firm will be around to answer questions about the preparation of your tax return months, or even years, after the return has been filed.
- Review your return before you sign it and ask questions on entries you don't understand.
No matter who prepares your tax return; you, the taxpayer, are ultimately responsible for all of the information on your tax return. Therefore, never sign a blank tax form.
Find out the person's credentials. Only attorneys, certified public accountants (CPAs) and enrolled agents can represent taxpayers before the IRS in all matters including audits, collection and appeals. Other return preparers may only represent taxpayers for audits of returns they actually prepared.
Find out if the preparer is affiliated with a professional organization that provides its members with continuing education and resources and holds them to a code of ethics.
Ask questions. Do you know anyone who has used the tax professional? Were they satisfied with the service they received?
Reputable preparers will ask to see your receipts and will ask you multiple questions to determine your qualifications for expenses, deductions and other items. By doing so, they are trying to help you avoid penalties, interest or additional taxes that could result from an IRS examination.
Return preparer fraud generally involves the preparation and filing of false income tax returns by preparers who claim inflated personal or business expenses, false deductions, unallowable credits or excessive exemptions on returns prepared for their clients. Preparers may manipulate income figures to fraudulently obtain tax credits, such as the Earned Income Tax Credit.
