If you are a taxpayer, like many of us in the US, you want to make sure that your return is complete and correct. As you know, before you sign any legal document, a tax return being a very important one, make sure that you examine it from top to bottom today, so you want get a nasty letter from the IRS tomorrow.
Ill number 1: This situation is applicable to individuals who are eligible to claim Earned Income Credit, dependents and whose income fall within low income thresholds: A common scheme is for tax preparers to redo the tax return incorporation phony Schedule C self employment income. This will increase your income, your tax, and Earned Income Credit such that it more than fully offsets the increase in tax, resulting in income to both parties. The tax preparer is paid by skimming money from the refund off the top before you are issued the check. The individual usually becomes wise to the scheme when the refund is not issued as expected, and the Internal Revenue Service is contacted. By then, you find that the refund that was issued was much higher, with the tax preparer pocketing the difference.
Remedy: Before allowing the preparer to send or transmit the return to the IRS, look at each entry carefully and check It against the documents you gave to the preparer. At bare minimum, you should make sure that your name, address, and social security number are correct. Check the names and social security numbers for your dependents and spouse as well. Don’t forget to check your routing and account number if you are expecting a refund. If you see an entry that you don’t understand, do not be afraid to ask the preparer for clarification. After all, this is your tax return where you will be held responsible for any later discrepancy found on it.