Tax season is upon us, and that usually spells good news for credit repair! Unless you have underpaid your taxes this year, a refund is great way to focus on your credit repair goals, including debt reduction, emergency savings, or taking on a new loan to diversify your portfolio. It can also help with long-term savings for emergencies, retirement, or your kids’ education. With a windfall in your future, you can’t afford to attach yourself to the wrong tax accountant. When you hire someone to prepare your returns, keep the following warning signs in mind. The wrong person could keep you from the cash you deserve, or worse, cheat you out of a hefty sum. When credit repair is on your to-do list, why take any chances?
1. Promises, promises.
A preparer who promises a big refund is an obvious red flag. Without reviewing your yearly finances and crunching the numbers, they are in no position to guarantee anything. The best you can hope for is an accountant who promises to file your taxes accurately and honestly; no more, no less.
2. You are encouraged to embellish.
Fudging your taxes is a great way to land in the “audit” pile. A professional who encourages you to defraud the system is a liability, not an advocate. Unless you are prepared to resurrect seven years’ worth of personal records for Uncle Sam, stick with an accountant who plays by the rules. Don’t mess with the IRS.
3. There’s a profit-sharing policy.
Accountant fees should never come on a sliding scale. While it may seem kind when they offer to adjust their fee based on your refund amount, consider this offer more carefully. Why should their work cost more if you are paid more? Is their time suddenly worth twice what it would have been? Find a pro who offers a flat rate fee for their time and expertise. Honesty should never come on a sliding scale.
4. They have no credentials.
Although anyone can file tax returns, it’s a different story when it comes to accountants and preparers who receive payment for their work. The IRS requires these folks to have proper credentials in the form of a Preparer Tax Identification Numbers (PTINs). For added security, check out your accountant’s ranking with the Better Business Bureau and ask how long they’ve been in business, what other credentials they have, etc. Why pay a novice when experts are available?
5. They offer to “handle” your check for you.
If your tax refund is in the mail, your name should be on the check. An accountant who offers to handle or distribute the funds to you is complicating the process at best. At worst, they are attempting to skim cash off the top without your knowledge. Be wary of preparers who try this tactic. If you aren’t presented with a direct-deposit option, it’s probably time to hire someone new.