Watch Out For These Red Flags When Hiring A Tax Agent

Watch Out for These Red Flags When Hiring a Tax Preparer

Even if someone prepares your taxes for you, you're still on the hook for the information they submit to the ATO. That's why you don't want to just pick anybody to help prepare your taxes. Here are a few tips for finding a reputable accountant.

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According to the IRS website:

Taxpayers are responsible for the accuracy of all entries made on their tax returns, which include related schedules, forms and supporting documentation. This remains true whether the return is prepared by the taxpayer or by a return preparer.

The above also holds true in Australia. This means, even if you paid someone to put together your taxes, you're ultimately on the hook for any audits, fees or penalties. Here are a few tips and red flags to watch out for when it comes to vetting a legit tax preparer:

  • Be wary of tax agents who claim they can obtain larger refunds than other preparers.

  • Avoid preparers who base their fee on a percentage of the amount of the refund.

  • Never sign a blank tax form.

  • Ask questions. Do you know anyone who has used the tax professional? Were they satisfied with the service they received?

These are just a few tips to keep in mind. If you're thinking about hiring a professional to do your taxes, you'll want to head over to the ATO website for more detail.


Comments

    I'd also avoid instant refunds.

    They arent instant, the tax agent is just giving you the refund based on their estimate, which are pretty accurate.

    What it means though is you're basically signing over a blank cheque to them, as any refund from the ATO would go into the tax agents account not yours, and they can do some pretty dodgy things in your name,

    Other risks on the list often go hand in hand with the instant refunds as well, like claiming larger refunds.

    One thing I suggest to everyone is to have a go yourself. YOU are responsible, so go into the accountants with at least some knowledge of where things should head, and where there are differences between what you did and what they did, ask questions and learn.

    For most people there are very few reasons they need to go to an agent in the first place, and if you know the basics you should be able to get very close to what they are getting back anyway. Certainly within the range of their fee.

      A professional can do things others can't and I believe the fee is worth it.
      My agent just saved my partner and I $1800 in late fees. Yes we were stupid doing our tax late but newborn twins took up a lot of our time and effort.
      Anyway, I would never have got that money back having already paid the fine he somehow made some calls and got it refunded. He has covered his fees for the next 4 years.

    Fair enough. I did say for most, which doesnt mean all :)

    The general salary and wage earner doesnt really have a lot of deductions, and if they cant get within $300 of what a professional should, then they should the next year. My point was mainly with the mentality that you should know whats going on rather than blindly trusting them, because at the end of the day the responsibility falls onto you, not the agent.

    That doesnt mean there arent reasons to use one. Just that most people go to them out of laziness and dont want to make the effort to understand what in the end is usually a pretty straightforward process for most people.

    And its good you got the late lodgement fees removed, clearly the agent fell into the latter category there.

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