Mistakes are a real possibility when filing tax returns, even for seasoned professionals. If you've hired one of said pros to handle your return this year, you must know how things will shake out if they make a mistake on your taxes.
Looking at the stats, a fair amount of you out there, if not a huge amount, use or are considering using a tax preparer for your return. A study from GoBankingRates published last year found that around 22%, just shy of one in every four, of respondents planned to use a tax pro, with most of those folks going with a certified public accountant and a few opting for a tax lawyer. I and many other folks I know have generally avoided tax pros, largely because, as younger taxpayers, we can't afford them, and our taxes aren't that complicated.
There are a lot of reasons why one out of every four taxpayers might be paying professionals, more than likely for the peace of mind that said professionals won't make mistakes. But errors pop up when you least expect them, so you should know how to handle one made by a tax professional.
For all the information you'll need, keep reading. For more tax tips and coverage, find out if a government shutdown will delay your tax refund and learn about a deduction based on your student loan payments.
Who is responsible for fixing a mistake my tax professional makes?
In short, almost certainly you. Even if you've paid someone to prepare and file your tax return, you're the one who is ultimately responsible for fixing any problems that the IRS finds. Some tax professionals may offer to help remedy things if they make a mistake, but this is not required by law.
"Under federal law, the consumer is always responsible for the content of their return," IRS Enrolled Agent Jassen Bowman explained in an email exchange with CNET. "That's why you still have to sign it yourself, saying it's accurate, even if you pay a professional to do it. While preparer penalties do exist, the taxpayer is ultimately responsible for penalties, interest, even criminal prosecution in extreme situations -- even for an honest mistake by a reputable tax preparer."
What steps can I take to avoid a situation like this?
When seeking out a tax professional, be sure to thoroughly review the contract you make with them to see if they will offer any help for mistakes they make. If such a promise isn't in the contract, you might also consider asking for it to be part of the arrangement.
Among the more common tax mistakes are ones caused by reporting income incorrectly. This can sometimes mean the IRS owes you more money back, but it can also mean you might owe the government more or that you were overpaid via your tax return. If your tax professional's error caused this issue, you're still on the hook to pay the IRS to make things right.