Understanding income tax laws is not easy for a layman. Every individual who earns, however, must pay their taxes, for which they have to file a tax return. That is why many taxpayers, especially HNWs who are short on time,
hire a tax preparer to file their income tax returns. The bad news is that not all tax preparers have similar experience and knowledge as some are just luring taxpayers with false promotions, and offer no value for their fee. To ensure you do not end up hiring the wrong tax preparer, here are four tax preparer red flags to avoid.
1. Suggest You Deposit Your Money in a Different Account
It goes without saying that your tax refunds must go into your account. There are a few tax preparers who might suggest you to deposit this money in a different account, with reasons that the refund would arrive faster or it would be more convenient for you to get your money this way. Chances are, if you are not getting your money in your account, you are never going to get it.
2. Promise of High Returns in the Same Situation
Tax refunds or deductions have not increased significantly over the years, instead there has been a rise in the percent of payable taxes in the past few years. That said, if a tax preparer is promising that they can get you higher tax return than last year, when the situation has not changed, they might be showing you incorrect figures.
3. Fees Based on Refund Percentage
Tax preparers who charge their fee on the basis of refund are more likely to be fraudsters. The fee of a tax preparer should ideally be based on other factors such as the type of tax return and its complexity. If the tax preparer you are working with, or about to hire, base their fee on the refund amount, watch out, as you might de dealing with the wrong person.
4. Insist on Signing a Blank Form
Even if a tax preparer is filing the tax return on your behalf, you are liable for whatever information there is on your tax return form. Signing a blank paper is like signing a blank check. You may never know if the information that your tax preparer has entered is correct or false. Stay away from tax preparers who ask you to trust them and sign on the dotted line without worrying about the information present in the paper.
Conclusion
Many tax preparers offer false promises such as higher tax refunds and a guarantee of a refund by a certain date to sell their services. A few may even ask you to pay a health insurance penalty directly to them. That is why it is essential that you do not trust individuals who give you unreasonable promises, and look for those who would help you get your taxes right. If you need help to file your taxes, better hire a licensed professional such as an attorney, or a CPA (Certified Public Accountant).
