Hiring a return preparer sometimes becomes necessary when taxes are more complicated than simple calculations. A professional with knowledge of the tax code and tax breaks can help save you time and money. However, before choosing a return preparer, taxpayers should check the following to avoid fraudulent return preparers.
1. Preparer’s PTIN
Anyone, including enrolled agents, who prepares or assists in preparing federal tax returns for compensation, is required to have a valid 2016 Preparer Tax Identification Number (PTIN). A PTIN helps to track a return preparer in case of fraud.
2. Preparer’s Qualifications
To find a return preparer with sufficient qualifications, you may use the IRS Directory of Federal Tax Return Preparers. Using this directory, you can search professional return preparers with a valid PTIN holding professional credential or those who have obtained an Annual Filing Season Program Record of Completion from the IRS.
Here are the various types of individuals who may prepare federal tax returns for compensation:
3. Preparer’s History
Even if you choose a return preparer from the IRS directory, it is important to check the preparer’s background and history before moving forward with him or her. The Better Business Bureau and the Federal Trade Commission are valuable resources for researching this information. For CPAs, you may check with the State Board of Accountancy. For attorneys, check with the State Bar Association. For enrolled agents, visit ‘Verify the Status of an Enrolled Agent’ at IRS.gov.
4. Service Fees and Hidden Fees
Fraudulent return preparers often base their service fee on a percentage of the client’s refund. To increase their fee, they manipulate information on their client’s tax return for a bigger refund. Avoid return preparers who base their fee on the refund amount or charge a hidden fee after being hired.
5. Check Availability
Gather the contact information of the return preparer, including their office address, phone numbers and PTIN. The preparer should be available in case you need help after the filing deadline.
6. Review Your Return
Sign your tax return only after reviewing all the information on it. Check if the preparer has included his/her PTIN. Ask the preparer to e-file your tax return. Alternatively, you may e-file your return for free using the IRS e-file service.