As the IRS gets stricter, tax payer questions get crazier. It’s unfortunate that there are accountants out there who are willing to put their integrity on the line by any means necessary. As someone who works hard to provide high quality service, it's disappointing. If your accountant or tax preparer is a legitimate business owner, there are certain behaviors they will not tolerate. If you want quality service, here’s five things NOT to ask your accountant.
Can You Create a Job For Me?
This question isn’t out right asked all the time. It’s implied by the type of documentation or lack thereof provided by the tax payer. Telling your accountant you’re self-employed but having no receipts or support to back up this claim is unreasonable. Being self-employed does not negate your responsibility to keep accurate records. Asking your accountant to document income and expenses that were never incurred is willingly committing fraud.
There’s a misconception that you must have income in order to receive a refund. If you’ve had no income you aren’t required to file a return but you may want to do so as credits may earn you a refund. It’s better to file with no income than to falsify an occupation along with income and expenses.
Can You Leave Out Some of My Income?
“If I didn’t get a 1099, do I have to claim it?” If you’ve made income within the year, you have to pay taxes. You are ultimately responsible for your tax obligation (not your accountant). Asking your accountant to willingly participate in tax evasion is illegal. Not only can you be fined but your accountant can be fined as well. If you work a traditional 9-5, your employer should be providing you with a W-2 to report your wages earned. If you’re an independent contractor on the side, you should receive a 1099 for income generated. Lastly, if you’re working on the side for yourself, keep accurate records of your income and expenses -- these numbers MUST be included on your tax return.
Can You Mimic My Prior Year’s Return?
Trust me, nothing annoys your accountant more than hearing “that’s not what you did last year”, “Why isn’t the refund the same as last year” or “Can you do what you did last year?” Your prior year return is a good starting point but it is not the holy grail. Tax laws change and just because you did or didn’t qualify for certain credits or deductions last year doesn’t mean the same is applicable this year. Should you ask questions? Absolutely! However, as an accountant it’s my job to ensure you get the LOWEST tax liability as possible. Unless you’re dealing with an incompetent tax preparer, he/she will use their knowledge to complete your return as accurate as possible.
Falsely Claim Credits and Deductions
Your tax return is to be completed based on accurate and current information. Credits and deductions are used to reduce your tax liability. However, these credits and deductions should be based on your true financial position. The IRS has been getting savvy with flagging fraudulent returns. Not only can you be audited for your current year return but “the IRS can normally audit returns filed within the last three years. Additional years can be added if substantial errors are identified or fraud is suspected.” Taxpayers who have filed incorrect returns are subject to civil penalties and/or criminal prosecution depending on the offense.
Falsify Donations To Charity
There are certain expenses that qualify as charitable donations. The IRS is very clear about making sure the charity you donate to is valid. There are groups who pretend to be charitable organizations to receive donations. The IRS included this scam on their “Dirty Dozen” List of Tax Scams for 2017. It is up to you to do your research to ensure that you are donating to a reputable organization.
The only way to become clear on your obligation as a tax payer is to ask questions. However, be mindful of the type of questions you knowingly ask which put your Accountant in an uncomfortable situation. Our job is to not only accurately file your return but to educate you. If your accountant is legitimate, he or she will not be willing to jeopardize their integrity or yours for a larger refund or lower tax liability. Do your research when choosing someone to handle something as delicate and personal as your taxes.