What happens if the IRS comes calling, wagging a finger at you for a mistake on your tax return – but the error was made by your tax preparer? Tax specialists say it totally depends on the mistake and the person who made it.
The rule of thumb is if (regardless whose fault) you have short-changed Uncle Sam, you’re probably going to be responsible for the taxes you owe. Your preparer, however, might/should offer to pay whatever penalties and interest you incur. The best suggestion I can give you on this: always ask. Some companies like H&R Block, cover those costs and will even pay the difference in your tax bill up to $5000 if you want to ante up upfront an extra $30 to $50 for protection.
How do you find a qualified professional tax preparer? There are only two states – California and Oregon – that regulate them. Ask for referrals from people you know and trust. Look for members of the National Association of Tax Professionals (http://www.natptax.com/) or the American Institute of Certified Public Accountants (http://www.aicpa.org/) in your area.
Remember my mantra? It’s your money so take it personally. You’re getting ready to hire someone to assist you in verifying to the government what your income is and what your tax responsibilities are. It’s your money so be sure the preparer is experienced with returns like yours and that you ask good questions.
- How many years has the preparer been in business? Your comfort level increases when you know the person has extended experience in the tax law.
- Is the preparer a CPA (certified public accountant)? Different states have different requirements.
- What’s the focus of the preparer’s practice? If you have specialized needs, such as real estate or small business, you’ll want to find a preparer who is familiar with your industry’s specific tax protocols.
- How does the preparer stay current? There are 500 to 1000 changes to the tax code every year.
- How aggressive is the preparer regarding claiming deductions? You’ll want someone whose philosophy is similar to your own.
- How available is the preparer to assist you? In the event there’s a question or if you get a call from the IRS, you’ll want to know the preparer is available to help you year round.
- Has the preparer successfully negotiated with the IRS? You’ll want to know the preparer has experience in the trenches in the event of an audit.
- Cost? A simple return will be relatively inexpensive but more involved taxes take more time and cost more but could ultimately save you money down the line.
When speaking with a tax preparer whose services you might be considering, never hire a paid preparer who:
- won’t sign your return (which they’re required to do by law);
- sets a fee for services depending on the amount of your anticipated return; or
- guarantees you a refund before even learning of your specific tax situation.
Thursday, April 15th is Tax Day this year. Remember, even if you don’t have all the paperwork gathered and plan to file for an extension – you must pay whatever you owe on or before this date in order to avoid penalties.
Here’s to your health and wealth.
TAGS: choosing a certified tax preparer, Income taxes, questions to ask when choosing a cpa
In addition to the fantastic financial advice Valerie provides on this blog, this week I’m excited to share a podcast interview I recently conducted with Manisha Thakor, financial literacy expert and co-author of two great books on personal finance, On My Own Two Feet and Get Financially Naked.
In this 15-minute segment, Manisha answers the questions on the minds of today’s college students and recent grads, such as:
- What are the most important financial steps to take in your 20s?
- What are the biggest mistakes to avoid in your 20s?
- How can college students make good decisions about how much student loan debt to take on?
- What are the best ways to save money and live on a budget?
- What are the important financial steps to take when starting a new job?
Don’t miss this essential information for you and your wallet! Listen to the podcast now.
TAGS: 20 to 29 year old women and money, Generation Y, Money Basics
Debit cards are great as long as you do the math – regularly.
When it comes to debit cards – it’s important to stay in check. By that I mean be disciplined and always record in your check register the amount you just spent from your checking account. The concept is basic but many people find themselves in a debit dilemma because they forget to do that.
It’s a good mindset/discipline to always think of debit cards this way: you’re paying now – unlike with credit cards where you’re paying later. To use your debit card means you have to have money in the bank right now to cover your purchase.
In the event your debit card is lost or stolen, the Federal Reserve (http://www.frbsf.org/publications/consumer/plastic.html) – says:
- Your liability is limited to $50 if you notify the financial institution within two business days of discovering the loss or theft.
- However, you could lose as much as $500 if you delay.
- And if, within 60 days after receiving your statement on which the unauthorized charge appears, you don’t report it, you risk unlimited loss – meaning you could lose all the money in your account (plus anything in your maximum overdraft line of credit.)
Debit cards can share some of the same features and protections of credit cards:
- Zero liability: (as mentioned above) you’re generally not liable for unauthorized purchases as long as you notify the lender immediately.
- Fraud protection: the law requires financial institutions to replace funds within ten business days of notification (though sometimes sooner) for losses resulting from fraudulent card use.
- Disputes: you may have dispute resolution options if an issue arises from a debit card purchase.
Debit cards are hugely popular these days. But given the potential risk due to the direct access to your checking account, here are some suggestions on how to wisely and mindfully use yours:
- Protect your ATM/debit card as you would cash.
- If your card’s lost, stolen or you suspect it is being used fraudulently, report it immediately to your bank.
- Save your debit transaction receipts for better oversight of your account and be sure to always shred them when disposing of old receipts.
- Choose and memorize a safe PIN which means avoiding obvious numbers such as your birthday or address and share it with no one.
- Always know how much money you have in your account, and review bank statements carefully.
- Remember – your debit card may allow you to access money that you have set aside to cover a check that has not yet cleared your bank.
It’s a good idea to always notify your financial institution before traveling out-of-state (and certainly when out of the country) if you plan to use your debit card. Some banks will even send you alerts when your card is being used outside of its normal usage area – which is an attempt to prevent suspected fraud or theft.
And finally, know your card’s limits. Your debit card will have a “purchase limit” and also a “withdrawal (such as via your ATM) limit”. Usually they are not the same amount. If you don’t know what those limits are – find out! It’s your money, so take it personally. Mind over your money matters because mind over money – matters.
Here’s to your health and wealth.
TAGS: Debit cards, features, liability, protections
