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Archive for the ‘Tax Preparation’ Category

PostHeaderIcon Lessons From Instant Tax Service’s (ITS) Shutdown

Over the weekend, Instant Tax Service, the fourth largest tax preparation firm, was shut down by the federal government.  If you want the long story, Tax Girl does an excellent job of running through the details.  The short story is, Instant Tax Service was run largely by people who didn’t know what they were doing and who also made up stuff for people on their tax returns as well as lied about their fees.  It’s a sad story and I feel for those who were taken advantage of by this unscrupulous company.

People often ask me what I think of the franchised tax preparation firms.  My answer is pretty standard.  I tell people it’s a little bit like playing the lottery.  I know people who work for these companies and are outstanding tax professionals and there’s a chance if you go into one of these places, that you’ll get someone like them.  You’re more likely to get someone who just took their training and has only filed a a few weeks worth of tax returns.  I’ve also seen what these places charge and it’s pretty high.  The last person who’s return I saw was filed by H&R Block.  They got charged $320 and it’s something I would have charged $150 for during normal circumstances.  I don’t offer the instant cash like these places offer but if you e-file and opt for direct deposit, you usually get your money in around 10 days.  Last year I know people were getting their money within a week.

Ironically I recently did a video on how to find a good CPA (which translates into finding a good tax preparer) and you can check it out below.  In short, if it sounds too good to be true, it might be.  If someone suggests you make up numbers, you probably want to get out there.  One of the easiest ways to get audited is to manipulate your income so you qualify for the earned income credit.  Another easy way to get audited is to fabricate a business that creates a big loss.  If someone suggests either of those things, you’re best finding someone else to help you with your taxes.

PostHeaderIcon E-Filing Starts Today

The IRS launched electronic filing for the 2011 tax year today.  The IRS is touting that if you efile and have a refund and elect direct deposit, you’ll get your money in about ten days.  If you have to pay, you can efile now and pay later (by April 17).

Of course the big problem right now is that most employees don’t have their W-2s yet.  Employers have until the end of the month to mail out their forms so you probably have a lot of people chomping at the bit to file but can’t quite yet.  Of course this is better then last year when efiling was delayed because Congress took so long to pass their tax reforms.