Tax season can be extremely stressful, especially if you’re not sure what to expect or don’t have much experience with it. If you’re in need of tax preparation services and are wondering how to avoid being scammed by unscrupulous companies, this guide is just what you need!
Whether you choose to use a professional or do it yourself, this guide will help you make an informed decision that benefits you. You would be able to avoid tax preparation rip offs.
Brief Summary of these Tips
- Research Before You Hire – Verify legitimacy through IRS association and online reviews.
- Read All Contracts – Understand all fees and refund policies before signing.
- Get Estimates from Multiple Sources – Compare prices to avoid overpaying.
- Understand Refundable vs. Nonrefundable Fees – Know which fees can be returned if not used.
- Take Notes During Meetings – Keep track of important information and advice.
- Prepare Questions for Accountants – Ensure the accountant is attentive and fits your needs.
- Pay Attention to Return Addresses – Avoid phishing scams by verifying sender information.
Detailed Tips On How Do You Avoid Tax Preparation Rip Offs
Below are 7 tips consider in order to avoid any tax preparation rip offs.
1. Research before you hire
Here’s an easy, though not foolproof, way to tell if a tax preparation company is legit: Find out whether it’s associated with either the IRS or one of its approved tax preparer networks. That can be done online using this IRS resource page.
Although some scammers have managed to sneak their way into both systems. Research other areas too: Type your query—say, Best Tax Preparers in New York City—into any search engine and read through all of your results.
2. Read all contracts
If a tax preparation consultant or company provides you with a contract—and there’s no reason why they shouldn’t—read it thoroughly. It should clearly lay out what services are included in their fees, and what any additional charges may be (for example, if you need returns filed electronically rather than on paper).
You can also ask them directly about these things; even better if you have someone else ask on your behalf. Be clear on how they handle refunds. Make sure you know when they will issue refunds and what your cut is after taxes are taken out. That way you won’t be surprised with an unexpected delay from February all of March. If anything doesn’t seem right to you, don’t hire them!
3. Get estimates from multiple sources
There are a lot of companies out there who specialize in offering tax preparation services. In some cases, you can find hundreds of them operating in your area. To get an accurate estimate, it’s important that you request bids from multiple sources.
When you do so, you’ll be able to get a good sense of how much prices fluctuate depending on what service is being offered and where it’s being offered. If price is your top priority, requesting bids from numerous companies will help keep costs low.
4. Understand the difference between refundable and nonrefundable fees
Many tax preparation companies offer both refundable and nonrefundable services. Nonrefundable fees are set in stone. You won’t get them back even if you owe little or no taxes on your return.
Refundable fees, however, will be returned to you if they are not used. This gives you flexibility with your payment method but means that it may take longer for you to receive your refund after filing a tax return with a refundable fee attached.
5. Take notes during meetings
It’s easy for someone—even a tax professional or financial planner—to misspeak. And if you don’t take notes during your first meeting, you may forget crucial information later on.
Before asking for help, take some time to educate yourself on industry lingo and terminology. Doing so will help keep everything in context when you meet with an advisor.
You should also be prepared to ask questions like: What is my total debt load? Can I afford an annual vacation? If I lost my job, how long would it take me to get back on my feet financially? Be sure not only that you know what they mean but that they understand what you mean as well.
6. Create a list of questions to ask when meeting with an accountant
If you are meeting with an accountant, bring a list of questions for them to answer. This should include any concerns that you may have regarding your finances as well as ways in which you can save money throughout tax season.
Asking direct questions will help gauge how attentive and willing an accountant is to working with you and helping your needs in preparation for tax time. There is no harm in asking about price either. A high fee does not always mean quality, there are many qualified accountants who charge less than others and offer high-quality service.
7. Pay attention to your return address
One common tax preparation ripoff involves an email that appears to come from a reputable tax company. The email asks you (the victim) to click on a link and provides a confirmation number in order for you to pay your fees for services.
You’re directed through a series of links (which may or may not appear legitimate) until you’re asked for credit card information and personal details. Then, after all of your personal information is collected, it’s used against you—whether it’s used right away or down the road, at some point, someone will use it against you.
In short: Never provide your personal information via an unsolicited email.
Bottom Line
If you want to make sure that you’re not being scammed, make sure the company is registered with the IRS. By law, anyone claiming they can help you with your taxes has a legal obligation to register with the IRS, and registered tax preparers have a PTIN (Preparer Tax Identification Number).
You can visit the IRS website here and search for your local tax preparation services. Some websites will allow you to search based on location while others only give results based on business name.
If you’re uncertain about whether or not the business is reputable, try doing an online search of their company name along with scam or reviews. You should also ask for references from friends and family who have used the services before.
