Are you looking for a tax preparer for the upcoming season, but don’t know where to find one you can trust?
There are many businesses – reputable or otherwise – that help people prepare and file their taxes each year. But some of these businesses aren’t as reliable as they want you to believe. And a few might even be out to steal your refund.
Here are some key signs that suggest a tax preparer is one you should avoid:
They charge you a percentage of your refund.
Preparers that charge a percentage of your refund have an incentive to make your initial refund larger at first by claiming more credits and benefits than you really are entitled to. And when the IRS or Maryland Comptroller discovers this and begins an audit, you – not the preparer – are responsible for paying the IRS or Comptroller back. This results in a bigger payment for the preparer and extra debt for you.
In many cases, the percentage charged winds up being much more expensive than a normal flat rate charged by other preparers. This can be hundreds of dollars taken out of your refund that you could otherwise keep.
They don’t have proper credentials.
A professional tax preparer should be a Certified Public Accountant (CPA), an Enrolled Agent (EA), an attorney, or registered as a tax preparer in the State of Maryland.
You can check to see if a preparer is a CPA on the Maryland Department of Labor’s Certified Public Accountants Public Query website. The IRS maintains a searchable list of every Enrolled Agent in the country. You also may request verification that someone is an EA directly from the IRS by following instructions on the IRS website.
Preparers without these credentials aren’t qualified as a business to file other people’s taxes. Often such preparers will use employees working off a template who do not understand enough about the law to avoid making potentially serious mistakes.
They offer refund anticipation loans.
Refund anticipation loans are notoriously bad deals that charge very high fees. You can avoid the fees and need for the anticipation loan by filing your taxes early.
They are only open for part of the year.
The least trustworthy tax preparers will appear during tax season, process as many returns as they can, and then close up shop and move on. This leaves their customers without anyone to work with when the preparer’s mistake or fraud leads the IRS or Comptroller into an audit of the customer’s taxes.
For non-English speakers or limited-proficiency English speakers:
If you hire a tax preparer who speaks your first language, be sure to have someone you trust verify that the paperwork that the preparer gives you in English actually states what the preparer claims it does. Unethical tax preparers may tell you one thing about a tax form, when in reality the form is very different. They also may say they completed a form correctly, but actually didn’t – taking advantage of your inability to read the full form.
So, where can I find a trustworthy tax preparer?
The Volunteer Income Tax Assistance Program (VITA) can provide free, high-quality tax preparation services to low- and moderate-income taxpayers through the Baltimore and Maryland CASH (Creating Assets, Savings and Hope) campaigns. The CASH Campaign of Maryland is now offering appointments for its IRS-certified, free tax preparation service. You may be eligible for this free program if you earned $60,000 or less last year. Call 410-528-8006 or visit cashmd.org to learn more about the Baltimore and Maryland CASH campaigns.
You also can find other VITA free tax preparation sites nationwide at irs.treasury.gov/freetaxprep or by calling 800-906-9887.
AARP offers free tax preparation though its Volunteer Tax Aide Program to those over 50 years of age. Volunteers operate virtually or in-person nationwide and you don’t need to be an AARP member to qualify. This program will open soon for the 2022 tax filing season. So, keep an eye out for more news.
If your taxes are relatively simple and you are comfortable completing online forms, you also may want to consider filing your own taxes online. The IRS website at irs.gov/filing/free-file-do-your-federal-taxes-for-free has a list of IRS-partnered companies that offer free, guided federal tax filing programs that do much of the work for you. Keep in mind that each organization has a different set of criteria for eligibility and that state taxes may not be free. However, this is still a good option for those who are comfortable doing part of the work themselves.
This article was written by
John Hardt, director of the Low Income Tax Clinic at the Maryland Volunteer Lawyers Service.