Millions of people trust tax accountants to handle the confusing task of filing taxes. If you’re planning to hire an accountant, it’s essential to find someone you can trust just as well. A simple background check on the professional or a recommendation from someone you trust can go a long way.
That way, you can avoid getting misled or making grave mistakes on your tax returns.
These signs will help you differentiate between competent tax accountants and others
They don’t have a PTIN
The Preparer Tax Identification Number (PTIN) is mandatory for everyone who prepares tax for compensation. Any professional you hire to do your taxes should have a PTIN, and you have the right to ask. The IRS’ Directory of Federal Tax Return Preparers contains a list of every registered individual, and it’s a good idea to look for your professional’s name.
A promise of ridiculous refunds
Tax returns are based on how much you earn and how much taxes you’ve previously overpaid. There’s an upper limit to how much you can expect back from the IRS, and no one can change that figure. A tax accountant who constantly boasts of higher refunds than the competition may not be completely honest.
Either they promise more than they can deliver, or they plan to cut corners in your tax return. If your refund isn’t obtained legally and you get audited, you could face severe consequences, including getting banned from taking earned income tax credit.
A request for you to sign suspicious documents
As a rule of thumb, you should never sign anything unless you know what’s on it. If your tax accountant asks you to sign documents you don’t understand, ask questions. You’re responsible for everything on your tax return, and you should know what you’re turning in to the IRS.
There are also reports of shady accountants who ask their clients to sign documents granting the accountant permission to file and receive all the tax refunds. If your tax preparer asks you to sign a suspicious document, you should investigate.
Fees based on a slice of your refunds
Some professionals prefer to charge based on the quality of their service. The more they get for you, the higher they get paid. Unfortunately, the IRS has found that this isn’t always the best practice when it comes to tax returns.
According to them, tax accountants who get paid a flat rate are more upfront about their refunds than professionals that get paid a percentage. A slice of your refunds is an incentive to beef some numbers and cut corners. Both of these can earn you an unpleasant audit by the IRS.
What can you do differently?
Here are some tips on how to avoid these potentially costly scenarios.
Hire competent attorneys.
Vet your tax accountant before you hire them. Here are some great tips to follow.
- Only hire CPAs.
- Check their PTIN.
- Use online job websites like Glassdoor and Upwork.
Consider filing the taxes yourself.
Even though most people avoid Tax Day as best they can, it’s sometimes best to take the bull by the horns. You can use online tools to understand how to fill out your forms, and free tax calculations to handle the math. The income tax calculator can be found here.