There is some controversy concerning the difficulty of income tax preparation. Many of the rules and laws surrounding income tax preparation are considered by many to be very confusing.
This is why most people choose to receive assistance from tax preparers, however, this can sometimes be very costly. Also, if the tax preparer makes an error, it will be the tax payer, not the preparer, that will be held accountable. Instant refund loans may sometimes be pushed by tax preparers, which can also prove to be detrimental to the tax payer.
Filers can run into tax return preparation problems whether they are filing the returns themselves or hire a tax preparer. There are several problems that filers should be aware of when choosing to hire someone to aid in income tax preparation. Those who hire tax preparers should be skeptical of professionals who promise abnormally high refunds.
People will receive a tax refund if they pay the government more money in taxes than they were required to pay. The tax refund will be based on income, deductions, and overpayment. This means that tax return preparation, regardless of who it is performed by, should result in similar refunds. Preparers who offer a larger refund may not be filing tax returns correctly.
Also, filers should be aware that tax preparers are not permitted to charge a contingency based fee, meaning they cannot charge based on the amount of tax refund the person receives. Those who file with tax preparers will still be required to keep their personal records in order. Tax preparers will still need to view all the necessary paperwork and receipts in order to complete the IRS forms.
Filling out the incorrect form is a common problem that occurs during income tax preparation. People must determine their correct filing status to ensure they will complete the correct form. This means that there is a specific form for single individuals, married individuals with or without children, widows, etc. Errors in tax return preparation will be greatly reduced when people ensure that they are filling out the proper paper work.
Another common problem is claiming certain people as dependents when they are not eligible. It is important to establish the status of every person in the household before claiming dependents. All income must be reported during income tax preparation. Some people may fail to report income that is not included on their W-2 Form; this can create considerable problems with the IRS.
To avoid common problems, it is advised that the filer: check to make sure the forms are signed in the proper places, ensure that all parties (such as the spouse) have signed the forms, copies of all income forms (such as W-2 and 1099) are attached, all personal information (such as social security numbers) is correct, all calculations are free of mathematical errors, and that proper postage is attached and mailed to the correct address.