How to find a reputable preparer.

How to Choose a Tax Preparer and Avoid Preparer Fraud   FS-2009-7, January 2009

Return preparer fraud involves the preparation and filing of false income tax returns by preparers who claim inflated personal or business expenses, false deductions, unallowable credits or excessive exemptions on returns prepared for their clients. Preparers may, for example, manipulate income figures to fraudulently obtain tax credits, such as the Earned Income Tax Credit.

In some situations, the client, or taxpayer, may not know of the false expenses, deductions, exemptions and/or credits shown on his or her tax return.

However, when the IRS detects a fraudulent return, the taxpayer — not the return preparer — must pay the additional taxes and interest and may be subject to penalties.

The IRS Return Preparer Program focuses on enhancing compliance in the return-preparer community by investigating and referring criminal activity by return preparers to the Department of Justice for prosecution. The IRS can also assert appropriate civil penalties against unscrupulous return preparers.

While most preparers provide honest service to their clients, the IRS urges taxpayers to be careful when choosing a preparer –– as careful as they would be choosing a doctor or lawyer. Even if someone else prepares a tax return, the taxpayer is ultimately responsible for all the information on the return. For that reason, taxpayers should never sign a blank tax form. And they should review the return before signing it and ask questions on entries they don't understand.

Helpful Hints When Choosing a Return Preparer
  • Be cautious of tax preparers who claim they can obtain larger refunds than other preparers.

  • Avoid preparers who base their fee on a percentage of the refund.

  • Use a reputable tax professional who signs the tax return and provides a copy.

  • Consider whether the individual or firm will be around to answer questions about the preparation of the tax return months, or even years, after the return has been filed.

  • Check the person’s credentials. Only attorneys, certified public accountants (CPAs) and enrolled agents can represent taxpayers before the IRS in all matters, including audits, collection and appeals. Other return preparers may only represent taxpayers for audits of returns they actually prepared.

  • Find out if the preparer is affiliated with a professional organization that provides its members with continuing education and resources and holds them to a code of ethics.

  • Ask friends and family whether they know anyone who has used the tax professional and whether they were satisfied with the service they received.
Reputable preparers will ask to see receipts and will ask multiple questions to determine whether expenses, deductions and other items qualify. By doing so, they are trying to help their clients avoid penalties, interest or additional taxes that could result from an IRS examination.

Tax evasion is a risky crime, a felony, punishable by five years imprisonment and a $250,000 fine.

Do I need to file an income tax return this year?

A return is required once your taxable income goes over certain limits. Unearned income over $1,000.00 is a threshold to keep an eye out for. Filing status as well as age makes a difference in requirement so call the office to verify.

Am I eligible for an earned income credit (EIC)?

 EIC’s are available on different levels depending on income and number of dependent children in the household. EIC’s are higher for two children and the credits are issued on a sliding scale based on income. An income of approximately $15,000 with children receives the maximum EIC of $5,654.

What are some employee expenses I can deduct?

Expenses that you can incur because of your job can be written off on schedule A. They are limited to a percentage of your income but if mileage is involved, the deductions can really add up. Cell phone, computers, uniforms, equipment and dues are some items to be written off. The IRS and NYS have really become vigilant regarding receipt keeping, especially mileage logs. Feel free to download our mileage log to help you keep track. Call for more complete listings based on your occupation.

What is a 1099 and how do I report this income?

A 1099 is a way that income is reported to the IRS and State. This shows how much you received for work performed and it must be reported as other income on your return. If the 1099 was for non-employee compensation, it is subject to social security requirements and additional forms are due. Expenses can be written off against the gross 1099 and tax due on the net income.

What is the child tax credit?

The child tax credit is based on income levels so not everyone will receive the same amount. The IRS elimates this credit when a child reaches the age of 17 not 18, even if they are still in High School. Call our office for more infomation.

Is my information confidential?

January, 2011
Recent Congressional legislation requires I inform you of my privacy policy regarding your records. As you know, I collect non-public, personal information about you and/or your family in connection with the preparation of your tax returns. I want you to know that I DO NOT disclose any information about you to anyone, except with your permission. Access to your personal and file information is restricted. Strict physical, electronic and procedural safeguards are maintained to protect your personal information. As required by law, I will notify you of this privacy policy annually. If you have any questions regarding tax issues or this privacy policy, please do not hesitate to contact my office.

What are your fees?

Fees are based on the type of return required. Fees start at $125.00 and include itemizing your return. We are happy to offer our clients FREE electronic filing for your NYS and Federal returns. We now accept all major credit cards.

Who do I contact about the status of my refund?

We are not responsible for the issuing of refund checks either electronically or though the mail. Contact the IRS at (800)829-1040 for general questions and (800) 829-4477 for refunds. Contact NYS at (800) 225-5829. If you have supplied us with direct deposit to a bank account you can refer to this schedule for an approximate deposit date.

What am I able to claim when I donate my car to charity?

One major change affecting taxpayers in our area is the change for deductions of donated vehicles. Additional documents will be needed this year to get the maximum deduction. Deductions are not based on blue book value any longer, but rather on the fair market value.

I'm retired and moving out of New York state. Is my pension taxable?

Every state is different. Please contact us for further help.