As we approach the new year, we will start seeing a plethora of television ads from competing tax preparation companies. They will make claims like promising “instant tax refunds” or they will tell you that you don’t need your W-2 forms to come in and prepare your taxes. Well, the IRS does not process tax refunds any faster for these companies than for anyone else. What they are offering, if you qualify, is a short term generally high interest loan to be paid back by having your refund sent to them or the financial institution providing the loan. They will also usually be charging an extra fee for this service. The interest and fees will be deducted from the total amount of the refund as well as the tax preparation fee. As for not needing a W-2, except in certain situations where a substitute W-2 may be used, if you are employed for salary or wages you will need a W-2 to file your tax return. The ploy is to get you in the office to “start” your return so that you fell you have to come back to finish once the actual W-2 arrives.
Additionally, because there is still little regulation for who can prepare taxes for pay, when tax filing season comes along, unregulated preparers start popping up in temporary store front locations and they gone by by April 16th.
So what should you look for when selecting someone to prepare your taxes?
* Be sure to select a tax professional with the appropriate credentials. Enrolled Agents and CPA’s
are licensed professionals.guided by a code of ethics set forth by the Internal Revenue Service. We are required to keep up with the constant changes in the tax code through continuing education and this is reported to the IRS.
* Your tax practitioner should have a Practitioner Tax Identification Number and should sign all tax returns.
* You should use someone who is going to be available all year round to answer questions that may come up. There are life changes that occur during the year that may affect your tax situation and you may need someone available to offer advice as necessary.
Have a question? Contact Harold Blotcher. Your comments are always welcome!