Warning of tax preparers using self-prepared tax returns who practice tax return preparation and file returns without ever disclosing their information as the filer. Many self-prepared returns are often prepared by unscrupulous individuals who are neither registered nor qualified to file taxes. Many taxpayers are none the wiser to this practice until it is too late. It normally takes the IRS about 3 years to catch the mistakes or fraud committed upon completion and filing of a federal return.
The Tax Liability
Many small business owners could face the worst ramifications from these individuals who use turbo tax to complete tax returns. Small businesses are required to save a lot more documentation than individual filers. The penalties for business owners and entrepreneurs are enormous compared to individual filers. Business owners should be aware of the credentials of their tax preparer who may prepare company tax returns for them. It is crucial to not only their tax liability, but the cost of an audit if the IRS decides to audit a company.
Although Turbo Tax is a good preparation software for individuals who need guidance to file, professionals use more advanced software for their clients that require credentials. Self-prepared preparers are more focused on the refund amount whereas the professional is focused on accuracy and limiting the liabilities. It only takes a minute to look at the bottom of your 1040 tax return to see how they prepare to sign the return. Qualified and registered tax preparers must include this identification number on all federal tax returns they file with the IRS.
While hiring tax professionals to serve their clients, they must also perform their obligations to the IRS with due diligence and not violate any laws or help others file fraudulent claims. Thus, the paper return appears to be self-prepared, without any indication that a paid tax agent was used to complete the tax return, which helps to keep the tax return under review. The phantom compiler can print a paper report for his client and ask him to sign it and mail it to the tax office. According to the IRS, a fictitious preparer is paid to prepare a tax return but does not register either electronically or on paper as a paid preparer.
Tax preparers must sign the tax returns they prepare on paper and include their TIN on the tax return, which provides identifying information to the IRS. Make sure your income tax professional enters your PTIN number on your return – the IRS also requires this. Additionally, state filing also requires the same representation.
Accountants – Paid Preparer
If you are not paid for tax preparation services, you are not required to have a TIN, even if someone pays you to file or file their own tax return. Individual taxpayers, including TurboTax customers, do not require a PTIN to file a tax return. However, if you are paying an individual to prepare and file your tax return and they use turbo tax, it’s a good indication they are not qualified or registered to prepare your taxes.
Tax agents typically charge a minimum fee and cost depending on the complexity of your return (minimum fees average between $200 and $325), or they charge a flat fee for each module and procedure required in your return (tax return). For example, the average cost of Schedule C may be $175 more. According to the National Association of Tax Professionals, the average rate for preparing a Form 1040 is $203, and tax examiners who don’t use the flat rate typically charge $138 an hour. The price usually depends on your needs but is usually lower than what you would pay to prepare taxes for others. Some tax-complex business owners can pay upwards of $1,250 for full-service tax consulting and preparation services.
If you want to save time, don’t know how to deal with a difficult tax situation, or just don’t like doing math or using computers for your finances, a tax preparation service is a good choice for you. When asking questions, it’s worth taking the time to make sure you’re hiring someone with the skill level needed to prepare your taxes at a price you can afford.
There are Clarifications
In general, the IRS website contains many helpful solutions and other tips for people starting the process. Visit the PTIN Holder Directory and the Select Qualifications page on the IRS website. The IRS Directory includes compilers with PTINs and professional credentials recognized by the IRS. This searchable directory is designed to help you make your choice by providing a list of document preparers in your area who currently hold an IRS-recognized professional credential or have experience through the annual filing season program.
Self-Preparation Assistance allows registrants to complete their online tax returns on their own, and a certified VITA/TCE IRS Volunteer will be available by phone or email to answer questions. You can authorize the Treasury to discuss your return with the tax editor by checking the authorization box on the line immediately below your signature. All you have to do is sign everything at the end and pay, although it’s always a good idea to check your professionally prepared fees for errors before signing up.
If you have any questions regarding past tax returns filed by a ghost preparer, please call me on my direct line at 804-625-8061 or schedule an advisory session on my calendar.
Want to file with a pro, get a consultation here: www.workwithmcfadden.com/contact