Watch out for these signs of a sketchy or unqualified tax preparer that could lead to tax trouble.

3 minute read

If you’re like most people, you’re ready to put the most recent pandemic year behind you. Now that it’s time to file 2021 taxes, however, it’s also time to dig up your deductible expenses and tax credit figures that can lead to paying less tax and maybe even receiving a sweet refund.

Just like with all professions, however, not all tax preparers are created equal.

Before you hire a tax professional to prepare your 2021 taxes, make sure the person doesn’t come with these eight red flags that signal potential tax trouble.

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1. No Preparer Tax Identification Number (PTIN)

The IRS requires tax preparers to have an IRS Preparer Tax Identification Number (PTIN) before they can prepare taxes for a fee. If the tax preparer you’re considering hiring doesn’t have a PTIN, he or she isn’t allowed to prepare your return.

Find out: 7 Questions to Ask Before Hiring a Tax Preparer

2. Inadequate credentials

Make sure that the tax preparer you hire has the proper experience and credentials for your tax filing needs. If your taxes are fairly straightforward, a tax preparer with a PTIN and years of experience may be fine for your tax filing needs.

But if you’re self-employed and/or your taxes are more complicated, you may want to hire a credentialed tax preparer such as a Certified Public Accountant (CPA), tax attorney or an enrolled agent. Enrolled agents are licensed by the IRS and are required to pass an intensive exam and complete 72 hours of continuing education every three years.

To search for a tax preparer with the education and credentials required for your specific tax needs, search the IRS directory of federal tax return preparers with credentials and specific qualifications.

Find out: 8 Smart Ways You Can Get Free Tax Advice

3. Promises of a big refund

If your tax situation has changed, you may get a larger refund this year, and your tax preparer might mention that possibility. However, a tax preparer who “guarantees” a big refund before doing your income taxes may claim deductions for which you’re not eligible or fudge income for tax credits to achieve that big refund goal.

Find out: The 9 Best Tax Filing Softwares

4. Fees based on a percentage of your refund

The IRS warns against hiring tax preparers who base their fee on a percentage of your refund or promise you’ll get a larger refund if you choose them over other tax preparers. Such preparers may use fraudulent means like claiming deductions you’re not qualified to take or other refund-inflating tactics that could land you in trouble with the IRS later.

Find out: 6 Things That Can Delay Your Tax Refund

5. “Ghost” tax preparers

If a “ghost” tax preparer refuses to sign the return he or she prepared and tries to pressure you into filing without the tax preparer’s signature, you should be spooked enough to reconsider.

“Not signing a return is a red flag that the paid preparer may be looking to make a quick profit by promising a big refund or charging fees based on the size of the refund,” says the IRS.

Find out: 7 Questions to Frequently Asked Income Tax Questions

6. Asking you to sign a blank return

Beware of a tax preparer who asks you to sign a blank return. Who knows what the blank tax return will include when the tax preparer completes and files it? When you sign a tax return, you’re verifying that all information on the return is correct. Always review your tax returns carefully before you sign — and never sign a blank return.

Find out: How to File Taxes to Maximize Your Refund and Avoid Audits

7. Bad reviews

When choosing a tax preparer, take a step back if you come across negative reviews of their services at the Better Business Bureau or another site. One or two bad reviews may not be a huge cause for concern if you’re good at reading between the lines of a ranting reviewer with an obvious grudge to settle or one with a perpetually complaining nature.

But if there is a recurring theme of unprofessionalism, incompetence, dishonesty or other serious issues, it’s time to move on to better choices.

Find out: Do I Have to File Taxes on Freelance Work?

8. Unavailability after filing

If IRS questions about your tax return arise, the last thing you need is the inability to get in touch with your tax preparer after the 2022 Tax Day deadline of April 18. The IRS recommends making sure your tax preparer will be available after filing your taxes in case there are problems or questions from the IRS about your return.

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About the Author

Deb Hipp

Deb Hipp

Deb Hipp is a full-time freelance writer based in Kansas City, Mo. Deb went from being unable to get approved for a credit card or loan 20 years ago to having excellent credit today and becoming a homeowner. Deb learned her lessons about money the hard way. Now she wants to share them to help you pay down debt, fix your credit and quit being broke all the time. Deb's personal finance and credit articles have been published at Credit Karma and The Huffington Post.

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