Tax time will be here (again) before you know it. If your tax return is a simple one, you may be up to filing the return yourself. But if your situation is somewhat complicated, seeking the help of a qualified professional is probably the best move.
Our firm specializes in helping people resolve their back tax problems such as filing years of unfiled returns, settling your back taxes with the IRS, or negotiating favorable payment plans often unknown to the ordinary taxpayer.
There are millions of people getting threatening letters from the IRS every year, and we can help. But how did these mostly honest people end up in trouble in the first place?
When you hire a professional to do your taxes, you assume that the person doing your taxes is an expert, with years of training, the right licenses and certifications, and the expertise needed to do the job and do it right. In many cases, that blind trust is not too bad, but you cannot merely pick any old tax preparer.
The fact that the person you hire is allowed to do taxes is no guarantee of quality, or even of qualifications. Here are five things your tax preparer may not tell you, and how they can earn you with an unwanted tax bill at the end of the year.
Note: The COVID-19 tax relief, forgivable loan programs, and stimulus checks all have different and unforeseen tax consequences that you'll need to consider. If you have any tax trouble or owe more than $10k to the IRS or state but can't pay in full, contact the Lazarow Law Firm today. We help people find tax relief.
#1. A Lot Of Tax Preparers Have No Tax-Specific Training or Expertise
The fact that an individual, or an employee of a large tax preparation company, is allowed to complete tax returns means almost nothing. The tax preparer is not required to have tax-specific training or expertise to obtain the paid preparer tax identification number (PTIN) they need. The only requirement for getting the required PTIN is the completion of a simple form - one that takes about 15 minutes to fill out.
Before you hire any tax professional, you should ask about their specific training, qualifications, and expertise. Find out how long they have been doing taxes, ask about audits they have been involved in, and share your tax situation. Above all, do not hire anyone until you feel comfortable with their ability to handle your tax return correctly.
A CPA or Enrolled Agent licensed by the IRS is your best bet when looking for qualified tax professionals. We hear horror stories from our tax relief clients all the time where the tax preparer messed up something on their tax return or didn't give the client the right tax strategy, so they ended up with a burdensome tax bill.
#2. They Won't Be Preparing Your Return
It is an open secret in the world of tax preparers that returns are prepared in stages. That means the owner of the firm or the most experienced professional will probably not be the one who initiates your return.
Instead, a junior associate will likely enter your income information and other relevant data, identify potential deductions and tax credits, and give your return a quick review. Once that is done, a senior advisor or tax preparer should look at the return, verify that it is correct and sign off on it.
This sequence can often cause a communication breakdown causing issues that could land you with a large tax debt. Most taxpayers blindly trust their tax pro and don't thoroughly review the deductions and tax return draft.
If you are not comfortable with this multi-step process, it is essential to share your concerns with your preparer. The sheer number of tax returns large firms handle during a busy season makes this multi-step process necessary, but it is important to know how things work and what you can do to ensure the right level of attention.
It's also crucial to review the return in full detail to avoid any unwanted surprises, audits, or unforeseen tax debt.
#3. I May Not Research Unusual Deductions and Tax Breaks
Professional tax preparers tend to be a pretty conservative bunch, and that is good news when it comes to your chances of being audited. It can be bad news, however, for your overall tax bill.
Your tax preparer will no doubt apply the most common deductions and tax credits to your return, things like the deduction for educational expenses and health care costs and the earned income and retirement tax credits. What they may not do is research more unusual tax credits and deductions, even if they could potentially save you money.
If these special circumstances apply to your return, you should discuss the situation with your tax preparer and look for ways to include them with your filing. You may need to pay an extra research fee or renegotiate the cost of preparing and filing your return, but the tax savings could be worth the additional cost.
#4. CPA Does Not Mean Tax Relief Pro
When clients get into tax trouble or get behind on paying their tax debt, they often turn to the very same tax pro that prepared the return. Unfortunately, most CPAs and tax preparers are not skilled in tax relief.
Tax relief means they know all the available programs the IRS has to settle your tax debt or give you favorable payment terms that don't drown you in penalties and interests. Even if they think they know, they often aren't experienced in negotiating with the IRS on your behalf.
It is easy to assume that every CPA is a tax relief expert. After all, the CPA designation is one of the most difficult professional statuses to obtain, and only the most qualified accountants get to put the letters CPA on their business cards.
Even so, not all certified public accountants are tax relief experts, and many do not know any more about settling your tax debt than you do. Some CPA firms prepare tax returns for their clients as a courtesy, but their staffs may not have specific training or expertise in tax law or tax relief negotiations.
If you have back tax debt, we highly recommend readers to reach out to our firm first. Our clients never have to talk to the IRS, and tax resolution through our firm can save you money and time in the long run. You might also be eligible for other IRS relief programs or get your penalties reduced or removed. Reach out to the Lazarow Law Firm today for a free strategy session.