The tax filing deadline isn't until April 15, but consumers who expect a refund often rush to file their taxes as soon as they get a W-2 form from their employers.
Rushing to file your taxes could be a mistake, especially if you have investments or other income or you have deductible items like home mortgage interest or charitable deductions. If you need help filing your taxes, you may need to hire a tax preparer, too.
Hiring a qualified tax preparer can save you time and give you a sense of security about getting your taxes done right. Some preparers can even save you money by finding deductions or tax credits you didn't know about.
But how do you find a good one? First of all, ask friends who they've used and whether they had a good experience. You might ask a professional that you work with, such as a lawyer or financial planner, for a recommendation.
But don't stop there. Check online for Better Business Bureau's Business Reviews, which will tell you whether complaints have been filed against the business and how the complaints were resolved. If a company doesn't respond to complaints or has a large number of complaints in relation to its size, that could be a cause for concern. The reviews also include BBB ratings from A+ to F.
Ask the preparer about his or her qualifications. Tax preparers include enrolled agents, accountants or tax lawyers, as well as major firms that specialize in tax preparation. Although many accountants and some lawyers prepare taxes, not all accountants or lawyers are experienced and qualified to do them. Ask preparers how many tax returns they file every year and how many years they've been doing taxes.
You also want to be sure the preparer will be around if the Internal Revenue Service has questions or wants to audit your return. Some tax preparers close up shop after tax season. Ask your preparer how they can be contacted after April 15. Is the preparer qualified to represent you if you have a dispute with the IRS?
Be cautious if a preparer promises to get you a refund without knowing your situation. Until the preparer examines your records and fills out the return, there's no way to tell whether you'll get a refund or how big it will be.
Many preparers will ask you to sign a contract before they do your taxes. If your preparer has a contract, make sure you read and understand it. Ask about fees and when they are due. Will it cost more to do your taxes if you have a complicated return?
Some tax preparers offer to give you a check or debit card for the amount of the refund, less the preparer's fee. In some cases, accepting the check may be the same as taking out a loan from the preparer. Some advances are very similar to payday loans and carry interest rates from 50-500 percent. They may have hidden administrative fees. And if the preparer makes a mistake in calculating your refund, you may have to pay fines and fees to the IRS.
In most cases, there's no good reason to take these checks. If you agree for the IRS to deposit your refund directly to your bank account, you could get your refund within a couple of weeks anyway.
Finally, make sure you check your return for any mistakes, and ask the preparer to explain anything you don't understand. And don't make the most common mistake many taxpayers make: failing to sign the return. The mistake can delay the processing of your return and slow down your refund.
Sean Spence is the Mid-Missouri regional director for Better Business Bureau.