Tax season can feel like a nightmare for many of us. Whether you’re a first-timer or a seasoned taxpayer, the process of filing taxes can bring plenty of stress and confusion. That’s where tax professionals come in – they offer their expertise to help you navigate the complexities. However, despite their expertise, some mistakes can easily creep into the process, especially when choosing the right help. To make sure you’re not setting yourself up for disappointment (or worse, an audit), it’s important to avoid these common mistakes when seeking tax filing assistance.
Not Doing Enough Research on Tax Professionals
One of the biggest mistakes people make when seeking tax filing help is not thoroughly researching the tax professional they plan to work with. Sure, a quick search might seem sufficient, but you’d be surprised at how many individuals pick a tax preparer based on convenience or because they offer a low price. This could lead to poor advice or even misfiled returns that might trigger penalties.
Before deciding on a tax preparer, always check their credentials. Ensure that they are licensed and qualified. The IRS maintains a directory of licensed tax preparers, including Certified Public Accountants (CPAs), Enrolled Agents (EAs), and attorneys. If they aren’t one of these, be cautious. You should also read online reviews or ask for referrals from friends or family. A solid reputation speaks volumes.
Choosing a Tax Preparer Based on Price Alone
While it might be tempting to choose the cheapest option, remember that you get what you pay for. Some tax preparers might offer ultra-low prices, but this could be a red flag for corners being cut in the service they provide. On the flip side, tax professionals with unusually high fees could be overcharging or upselling services you don’t really need.
Instead of focusing on price alone, look for someone who offers a fair price for the service provided and has a track record of delivering quality results. Consider the value of their advice, their professionalism, and their experience in handling the type of taxes you need help with. The right tax professional will help maximize your refund or minimize your liabilities in a way that justifies their fees.
Ignoring Your Tax Situation
Another common mistake is not fully explaining your financial situation to your tax preparer. Whether it’s a side hustle, investment income, or even a significant change in your life (like marriage or a child), it’s essential to make sure your preparer understands every aspect of your financial life. Skipping out on this could lead to missed deductions or credits and, ultimately, a smaller refund or a larger tax bill.
Also, don’t assume that your tax preparer will ask the right questions. Be proactive in discussing your income sources, investments, assets, liabilities, and any life changes. The more complete the information you provide, the more accurate your filing will be. Don’t be shy about asking the tax preparer if they need additional information or documentation to ensure everything is accounted for.
Not Asking About Fees and Refunds Upfront
Some people make the mistake of not asking about fees and refund policies before they start working with a tax preparer. If you’re not careful, you could find yourself stuck with a huge bill after the fact or get blindsided by hidden fees.
When you first meet with a tax preparer, ask for a clear breakdown of their fees. Are they charging based on an hourly rate? Do they have a flat rate for certain services? Will you pay for additional services, like filing a state tax return? These are questions that need to be answered ahead of time.
Additionally, be sure to understand the refund process. Will the tax professional send you the refund directly, or will it be deposited in your account? Are there any fees associated with refunds? Getting clarity on these points can help you avoid unpleasant surprises later.
Failing to Check the Fine Print
The IRS has strict rules, and your tax preparer needs to follow them carefully. But what if your preparer makes a mistake on your return? What happens then? Unfortunately, many people forget to ask about guarantees or responsibility for errors made on their tax filings.
Before you sign anything, be sure to ask about guarantees. A trustworthy tax preparer will stand by their work, offering a refund or making the necessary corrections if an error is found on your return. But if they don’t offer such guarantees, you may want to think twice about using their services. In some cases, even if they do provide a guarantee, you could be left on the hook for IRS penalties or fees. Always review any contract or agreement carefully before signing.
Letting Your Tax Preparer Sign Your Return
It’s easy to let your tax preparer do everything for you, including signing the return. After all, they’re the experts, right? But this is a mistake you’ll want to avoid. While tax preparers can assist with the paperwork, you are still responsible for the information reported on your return.
Before you hand over the reins completely, review the tax return thoroughly to ensure that all information is accurate. This is especially important for things like income amounts, deductions, and credits. If there’s a mistake, you’ll be the one held liable, not the preparer. By double-checking the return, you ensure that you’re fully aware of what’s going on, which helps you avoid unnecessary stress later on.
Not Staying in the Loop During the Process
Tax filing isn’t a one-and-done process. Even though you might trust your tax preparer, it’s a good idea to stay engaged throughout the entire process. This means checking in regularly to ask questions or to clarify any uncertainties that arise. Sometimes, tax professionals might need additional documentation from you or there could be unexpected developments.
Being involved and keeping in touch will allow you to stay on top of things and prevent any last-minute shocks. Plus, it gives you an opportunity to ask your preparer for any advice that could help reduce your tax liability or increase your refund.
Relying Too Much on Online Tax Software
Online tax software can be a great tool for those with simple tax returns, but it can also be a big mistake for people with complex financial situations. If you have multiple income streams, investments, or complicated deductions, relying solely on online software might not give you the best results.
While it’s true that online software can save time and money, it doesn’t offer the personalized guidance that a licensed professional can provide. The software might miss out on deductions or fail to offer insight into your unique tax situation. If you have a particularly tricky situation, it’s best to get help from an experienced tax preparer who can provide advice tailored to you.
Not Being Prepared for the Next Tax Year
Even after your taxes are filed for the year, don’t let your guard down. Some taxpayers fail to take action after they file their returns, which means they miss opportunities to plan for the following year. If you’ve received a refund, consider whether adjusting your withholding would be a good idea. If you owe money, think about ways to reduce your tax liability in the future.
Also, keep a record of your tax documents for the year. This includes receipts, W-2s, 1099 forms, and any other documents related to income and deductions. Staying organized throughout the year will help reduce stress come the next tax season and make it easier to work with your tax preparer when the time comes.
Ignoring the Importance of Filing on Time
Finally, one of the most common mistakes people make is ignoring deadlines or putting off filing until the last minute. Waiting until the last minute can lead to missed opportunities, rushed filings, and even penalties for late filing.
Make sure you know the tax filing deadlines, and give yourself plenty of time to gather all the required information. If you need to file for an extension, do so early enough to avoid penalties. By staying ahead of the game, you can ensure a smooth and stress-free tax filing experience.
Tax filing doesn’t have to be a stressful, confusing process. By avoiding these common mistakes and working with a tax professional who understands your unique financial situation, you can make sure your taxes are filed accurately and on time. Don’t cut corners when it comes to your finances – with the right help, you can maximize your refund or minimize your liabilities without the fear of making costly errors.