Many taxpayers get help from professionals when it’s tax return time. If you use a paid tax preparer to file your return this year, choose wisely. Even if your return is prepared by someone else, you are legally responsible for what’s on it.
Here are a few tips for choosing a tax return preparer:
- Check the preparer’s qualifications. IRS regulations require all paid tax return preparers to have a Preparer Tax Identification Number. In addition to making sure they have a number, ask the preparer if they are affiliated with a professional organization. The IRS has requirements in place to make sure those preparers who are not an enrolled agent, CPA, or attorney have met minimal competency requirements.
- Check on the preparer’s history. Check to see if the preparer has a questionable history with the Better Business Bureau and check for any disciplinary actions and licensure status through the state boards of accountancy for certified public accountants; the state bar associations for attorneys; and the IRS Office of Enrollment for enrolled agents.
- Ask about service fees. Avoid preparers who base their fee on a percentage of your refund or those who claim they can obtain larger refunds than other preparers. Also, always make sure any refund due is sent to you or deposited into an account in your name. Under no circumstances should all or part of your refund be directly deposited into a preparer’s bank account.
- Ask if they offer electronic filing. Any paid preparer who prepares and files more than 10 returns for clients must file the returns electronically, unless the client opts to file a paper return. Massachusetts taxpayers can e-file their returns directly with DOR using WebFile for Income. WebFile for Income is free, convenient secure – and green! For more information, go to WebFile.
- Make sure the tax preparer is accessible. Make sure you will be able to contact the tax preparer after the return has been filed, even after the April due date, in case questions arise.
- Make sure they ask to see all records and receipts needed to prepare your return. Reputable preparers will request to see your records and receipts and will ask you multiple questions to determine your total income and your qualifications for expenses, deductions and other items. Do not use a preparer who is willing to electronically file your return before you receive your Form W-2 using your last pay stub. This is against the IRS’ e-file rules.
- Watch out for preparers who push Refund Anticipation Loans. The Office of Consumer Affairs and Business Regulation and Department of Revenue advise taxpayers to steer clear of tax refund loans, also known as refund anticipation loans (RALs). A refund anticipation loan is a risky proposition because it must be repaid even if the taxpayer's refund is denied, less than expected, or frozen. If the taxpayer cannot pay back the RAL, the lender may send the account to a debt collector. Also, because the loans are short term, the annualized interest rates are very high.