Who can you trust? It's tax time again... and if you have a lot of deductions or you have investments and property it can seem very hard to do your own taxes. There are numerous companies, both national and local, that will offer to file your taxes for you, for a small fee.
But should you use one of these companies, or try to file on your own? For the sake of argument, let's say you want to have someone file your taxes for you. Depending on the company, you may be walking into a trap. That is why the first thing you should do is check out the company with the Better Business Bureau.
Are they qualified? Many of these tax prep companies' employees are not tax experts. They are not enrolled agents. They've had a three-week training course at best. When you go to them, they're going to make all kinds of promises to get you more money than you've ever gotten back from Uncle Sam. Be very cautious at this point; "easy money" always has a catch.
Prepare, prepare, prepare... Make sure you have all of your paperwork and do all of the math yourself first. This will give you a frame of reference for when that company does your taxes. Also, if they recommend a deduction that you're not sure about, you probably shouldn't take it. Don't be seduced by the promise of a big payoff, ask the agent handling your taxes to prove the deduction is legitimate. If he/she can't, ask for a manager. It's your money, and you need to protect it.
They saw you coming a mile away. Do not be taken in by a "rapid refund." If your taxes are filed electronically, you'll get the money in about two weeks. A rapid refund seems great: the tax company pays you right away. But wait, this is actually a loan, and your planned tax return is the collateral. If you get audited, or your return denied, you still owe the tax prep company, and you don't have the tax return or worse, you owe the IRS too.
Statistics: For the tax year 2006, nearly $650 million was paid out to these companies for these rapid refund loans. That's $650 million that people filing their taxes could have used.
I'm not saying all of these companies are crooked. Many of them can help you if you feel like you're drowning in paperwork and don't know which tax form to use. Just remember to be careful because you don't want an IRS Wiseguy showing up at your door.
Now you have the smoking gun... Use it!
I'm Richard Close and I was a "Hitman" for the IRS. I was a second generation revenue officer. I took out anyone who owed the IRS money as my father had before me. Now I help thousands of Americans beat Uncle Sam and save thousands of dollars. Tax problems? Contact me and get free tips and techniques to deal with wage and bank seizures and slash tax debt: email me at IRS-Hitman@taxdefensenetwork.com or call 888-415-1337. Follow me on Twitter @irs_hitman.
Labels: Tax Filing, Tax Scams