The Cutting Edge: Don’t Get Taken By Your Tax Preparer

Diligence could save you trouble and money

tax situation is a little complex, you may want to reconsider hiring that person. Find a more experienced person at the chain tax preparer.

“Unenrolled and unlicensed preparers are not regulated. There have been ongoing concerns from Congress and other stakeholders about the lack of required training or demonstration of ability to apply tax law correctly for these unregulated tax return preparers,” J. Russell George, the TreasuryInspector General for Tax Administration, told the Wall Street Journal.

Do it yourself: If you only have one W-2, or your tax situation seems manageable, free online filing such as TurboTax or the IRS’ e-file, may be your best option. E-file is available to taxpayers who made less than $56,000 in 2008.

“I think when you feel comfortable with a very simplified tax situation, 1040, a 1040ez or maybe a 1040 with a schedule A, I don’t really see where it’s necessary to hire a professional,” Hankins says. “It really depends on your own abilities and how you [want to] invest your time,” she adds.

The IRS also offers free tax filing for individuals who make under $56,000. Call or visit your local IRS branch for more information.

Know your liability: Unfortunately, even if your prepare makes a mistake, you are responsible for coughing up the dough. But the daily compounded interest that accrues on money owed to the IRS can add up to an entirely new debt. Check your preparer’s policy before filing your taxes.

Hankins says the practitioner should remedy the mistake, and though the taxes would have been yours, they should pay the interest and penalties incurred. “That says the person is reputable and they care about their reputation,” Hankins says.

Shop around for preparers: Word of mouth is usually the best way to find reliable and quality services. But even still, you should double check the credentials of the preparer. Check with the Better Business Bureau to make sure there were no unresolved complaints against an agency. Contact the National Association of Enrolled Agents for a list of licensed tax professionals. The National Association of Black Accountants also offers a searchable database.

Renita Burns is the editorial assistant at BlackEnterprise.com.

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  • deebee

    Also, if you are a member of any business or professional association, then ask around as to who they would recommend. In addition, if you are not a working professional, but know a particular business owner that you admire their business skill and steadfastness, you might venture to ask that individual for a reference.

    More importantly, ALWAYS keep excellent records of all transactions both business and personal. Even when you sold Jr. that car! – or – Allowed your friend to use the car for any period of time based (in writing) on that person paying for all damages, repairs and gasoline stemming from that trip! Not only saves you a trip to the judicial court’s, but also saves you from IRS penalties!