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How to find a good tax preparer

CINCINNATI, OH (FOX19) - Making sure you pick the right person to do your taxes can be a difficult task.

Out of people who do taxes, 70 percent use a tax preparer to do our taxes, 20 percent use some kind of software, and 10 percent do it the old fashioned way.

If you can't or just won't do your taxes yourself, you are going to need some help. Hire the wrong person and you could end up with a real mess on your hands.

"What you don't want is someone who says that merely, 'I can get you the highest refund,'" said Nathan Bachrach, FOX19 Financial Analyst. "Somebody who says that my fee is based upon a percentage of the refund that you get, because number one, that's illegal."

Al Pearlman, a certified public accountant with Burkhardt and Company in Milford, Ohio, says the key to avoiding unqualified or dishonest prepares is asking the right questions.

There are four types of preparers - taxes attorneys, certified public accountants who have strict education standards, enrolled agents who have professional standards and who must be approved by the IRS, and preparers who may not have any training at all. Professional designation alone is not a guarantee.

Something else to check is to ask to see their PTIN. The IRS now requires tax preparers to register in order to file returns. If your preparer can't show their PTIN, it is a bad sign.

Another bad sign is if your preparer asks you to sign a blank tax form and says they will fill it out later. If they make it difficult for you to review your return before you can return it or your tax preparer does not ask you questions about your income and expenses then that is a bad sign.

It is not just the tax preparer who will get in trouble for filing false information on your return, you will get in trouble to.

"Penalties can range twenty to thirty percent, and depending on the magnitude of the transgression, can mean prison time," said Pearlman.

Refund anticipation loans are popular with some taxpayers but remember, it's a loan with your tax refund as collateral. The interest rates charge by some of these lenders is 500 percent or more.

A study from the Nation Consumer Law Center found Refund Anticipation Loans drained the refunds of about 8.4 million taxpayers in 2008 cost them more than $800 million in fees. That does not make sense in the ERA of electronic filing.

"If you file electronically and have the refund deposited directly into one's bank account, you can get it as quickly as ten days," said Pearlman

For about 70 percent of us, the IRS offers something called the "Free File Program." If you have an adjusted gross income of $50,000 or less, you likely qualify. You do not have to claim the standard deduction either. You can itemize and free file as well.

"If you have a schedule A, which is your itemized deductions, the typical ones, such as real estate taxes, real estate mortgage, charitable contributions, it will handle that," said Pearlman

Bachrach says that you can pay your tax preparer anything from an hourly rate to a flat fee. This is based on how complex your return is.

Either way, find out how much it is going to cost you up front.

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