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Payer beware: Warning signs to look out for when hiring a tax preparer

Posted February 10, 2021 2:09 p.m. EST
Updated February 10, 2021 5:59 p.m. EST

From Form 2441, Schedule 1, 2 or 3 and Schedule D – taxes can make you crazy.

It's no wonder many of us need help, but be sure to watch for who you hire as you gather all your tax records.

"Ultimately, the tax payer is responsible for what's on the tax return," said Mele Perrego, a federally licensed tax professional.

Perrego wanted to share a warning after a client needed help with a tax return done by someone else.

"She noticed at a later date that a very large sum of donations was deducted and also that a credit that she in no way qualified for was on the return," recounted Perrego.

Perrego said she amended the fraudulent return and submitted it with the corrected information.

"The refund that she received, that she should not have, is going to be repaid," she added.

The client now owes the Internal Revenue Service $560, plus penalties and interest.

There are a couple of red flags that could indicate the preparer is not on the up and up.

First, if a tax preparer doesn’t have a required Preparer Tax Identification Number, or PTIN, issued by the IRS or if the preparer doesn’t sign your tax form, often called a ghost tax preparer.

Another warning sign is if the preparation fee is a percentage of your refund or just very high compared to other preparers.

"They might charge $400 to $600 for a return that the person could get done somewhere else for $200 to $300," said Perrego.

Whatever information the IRS finds will be shared with the state.

Tax preparers with credentials recognized by the IRS can be found on the IRS website.

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