Big Money Tax Preparers

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Choose a tax preparer wisely, no matter where they hang their shingle.

It's the new year, and pop-up tax services are appearing in shopping centers, barbershops, and office spaces around the country. It sounds so easy. Sit at a folding table, hand over your Social Security number, income records, and other family details, and receive a hefty tax refund check in a matter of days. But there's a problem. The person eagerly collecting your information today may vanish tomorrow, along with your federal income tax refund, leaving you in a potential financial mess.

In-Person Tax Help

In-person tax help is convenient, fast, and worry-free. You simply turn over your financial information and "poof", you receive a tax refund check. At least, that's what fraudsters want you to believe.

While your gross household income won't require the payment of additional taxes, the tax preparer who set up shop in your favorite establishment is hoping you'll use his services to maximize your refundable tax credits.

All you have to do is follow his lead.

Tax Guy: You donated a few clothes to charity, right? Let's say - $500 worth.

Tax Guy: So, your kid is 18 years old? Hmmm. He still lives under your roof, right? We'll make him 16 so you can qualify for the Additional Child Tax Credit and boost your Earned Income Tax Credit.

When you correct him, he assures you that everybody plays around with the numbers, at least a little bit.

Ten minutes later, he prints your tax return. You're shocked at the size of your expected refund. He convinces you that his hard work is the reason you'll receive such a large refund, so it makes sense for him to receive a percentage of that amount instead of the standard tax preparation fee.

Tax Guy: You know what? I need to add a few final touches to the form. Sign the return now. I'll fill in the rest and submit it for you.

How can you say "No" to the cash you desperately need to pay your bills? The tax guy convinces you to sign the tax return and direct deposit authorization, which will deposit the refund into his account. He'll take his fee from there and give you the rest.

Several months pass, and you're still waiting on your refund from the Tax Guy.

Avoid This Nightmare

While most legitimate tax preparers won't encourage such unethical practices, the ones that do intend to steal your money. In this fictional scenario, the ghost tax return preparer not only received your tax refund and gained access to your personal information, but also left you with a potential financial mess. NOTE: Never sign an incomplete federal income tax return or sign over direct deposit authorization to a third-party.

Avoid this nightmare by checking their credentials and the Better Business Bureau website before agreeing to work with anyone who offers tax preparation services. Taxpayers are responsible for the information submitted on their federal income tax return regardless of who prepares it.

Choose a tax preparer wisely, no matter where they hang their shingle.