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You're a better tax preparer than the pro you're paying

A new study by a federal agency found that 17 of the 19 paid tax preparers it looked at made mistakes on tax returns.

By MSN Money Partner Apr 10, 2014 1:00PM

This post comes from Krystal Steinmetz at partner site Money Talks News.
 

Money Talks News on MSN MoneyYou might want to think twice before hiring a so-called tax professional to prepare your taxes. The Government Accountability Office released the findings (.pdf file) of an audit of tax preparers this week, and the results are surprising.


Calculator (© Stockbyte Platinum/Getty Images)USA Today said the GAO's small undercover study focused on 19 tax preparers selected at random in states that don’t regulate tax preparers. Some of the findings include:

  • Inaccuracies. Seventeen of 19 preparers made errors on customers' tax returns.
  • Count those tips. The most common mistake was not reporting tips. Twelve of the 19 tax returns had errors on tip reporting.
  • Big and small mistakes. "Errors ranged from giving the taxpayer refunds $52 less than due to a refund of $3,718 more than due," USA Today said.

A GAO survey from 2006 through 2009 showed that returns by tax preparation professionals had a higher rate of mistakes -- 60 percent -- than those done by taxpayers themselves (50 percent).


That's not really a surprising statistic considering pretty much anyone can claim to be a tax professional and charge you money to prepare your taxes.


According to The Washington Post:

"A lot of people think a tax preparer is an accountant or someone who has special training, but that’s not necessarily true," said Chi Chi Wu, an attorney with the National Consumer Law Center. "My middle school-aged son could set up a card table and prepare taxes. There's nothing to stop him."

Most states -- 46, to be specific -- do not regulate tax preparers. In fact, PBS said that "42 million tax returns are prepared by tax professionals who are unaccredited and unregulated by the IRS."


Several years ago, my husband and I had our taxes prepared by a woman we thought was a professional. I had no idea that any Joe Blow off the street could advertise tax preparation services. We answered all her questions, some of which we thought were weird, paid her $300 for her services, and went on our merry way.


We ended up with a huge refund, both from the state and the feds. We were thrilled, but a little confused as to why our refund was so much bigger. A year later, we were contacted by the state Department of Revenue. The tax "professional" we had worked with was under investigation for fraud.


In the end, we had to pay back the majority of the refund we received. We learned an important lesson, and we've worked with a CPA to prepare our taxes ever since.


The IRS does not have the ability to regulate tax preparers, so taxpayers are on their own when it comes to deciding how to file their tax returns.


"We're clearly on record for encouraging the IRS to educate the taxpaying public between various classes of preparers," Ed Karl, vice president of taxation at the American Institute of Certified Public Accountants, told USA Today.


Who does your taxes? Are you a self-preparer or do you hire a pro?


More from Money Talks News

VIDEO ON MSN MONEY

10Comments
Apr 10, 2014 10:05PM
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I was amazed what H&R Block charge people.  a few hundred dollars for a basic tax form.  I have a man who was schooled for 19 years as a tax attorney that charges less than most H&R block yearly students charge and represents me in court if IRS challenges any return. 
Apr 11, 2014 5:55AM
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H&R Block charged me more than 300.00 to file simple returns for the past two years.  When I lived in a different state several years back, I had an accountant file a complicated return for me and he charged 200.00.  From now on, it's going to be an accountant for me.
Apr 11, 2014 12:07AM
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Our tax Pro...told us we can write-off,  everything it is costing us to invade your planet
Apr 11, 2014 3:29PM
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I believe that's not as bad as the IRS. You can't get two to agree on anything.
Apr 11, 2014 1:29PM
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"Who does your taxes? Are you a self-preparer or do you hire a pro?"


I hire my uncle who is a step down from a CPA; he's an EA.

Apr 11, 2014 10:45AM
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If a VAT was instituted, there would be no income tax forms to fill out and no mistake to be made.
Apr 11, 2014 7:47AM
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A good tax professional is a good idea with the corrupt POS Obozo, and his democrats running this Government.
Apr 11, 2014 1:10AM
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 Tax pro? I would have thought this term was reserved for those who leech off tax? Welfare collectors and government so called "workers"........You know the democrats a party of every degenerate scum any society can produce.{ Nazis <socialist} {USSR <socialist }((((Democrats)))) <retarded socialist.
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