If this is your first tax season as husband and wife, here are four things that will be different this time...
4 Minute ReadTopic: taxes
Lori T. thought she was doing the right thing when she went to a so-called pro to file her income taxes. Early on, however, she had a bad feeling that turned out to be right on target.
"I had just purchased my first home," Lori said. "When tax season came around, I knew I could no longer use the 1040EZ form." She chose an agent who billed himself as an expert with 25 years of experience, specializing in first-time homeowner taxes—just what she was looking for. But as the agent began sorting through Lori's records, she had one of those unexplainable "bad feelings."
"I was told I could eliminate any worries if I purchased their IRS guaranteed protection package," Lori said. Many tax prep companies offer protection packages like the one Lori was offered. They guarantee the customer that the company will correct any mistakes an agent may make in calculating or filing the customer's income taxes. Since Lori was already feeling uneasy, she bought the extra protection, but the bad feeling wouldn't go away.
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I Owe How Much?
When the process was complete, Lori's agent told her she owed $8,000 in taxes, plus nearly $300 for the tax preparation itself! "I was stunned and panicked at the same time," Lori said. "I asked, 'How can this be? If I just bought a house, shouldn't that make a difference? Don't I get the first-time homebuyer's credit?'"
But the agent told her she'd received all the deductions she was eligible for and asked if she was prepared to pay the entire amount. "At this point, I was being rushed along because the next client had already been waiting 20 minutes," she said.
As Lori became more anxious, the agent suggested she get a loan or ask family or friends to help her pay the bill. She paid the fee for the service, gave the agent permission to file her return electronically, and left to find a way to come up with the $8,000.
A Second Opinion Is a Good Thing
That evening, a friend suggested Lori get a second opinion and put her in touch with one of Dave's tax Endorsed Local Providers (ELPs). Lori met with the ELP the next day and got some great news. She did not owe $8,000—she was actually due a refund!
"She found that the other preparer at the chain tax prep service made numerous mistakes not only in how my return was calculated but also in the lack of deductions I was eligible for, such as the first-time homebuyer credit I mentioned several times," Lori said.
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Lori also simply felt better about the service she received from her ELP. "I feel more secure because I believe she is truly working to do the best job possible for me, instead of feeling like I'm just the next person in line," Lori explained. "I can ask questions, and she will actually take the time to answer or explain without making me feel like I'm encroaching on the next person's time slot."
Tax Chain's Broken Promises
Using the documents her tax professional provided, Lori returned to the original agent to file an amended return. The agent corrected the mistakes, but the company refused to refund her preparation fees or the cost of the guaranteed protection package.
Lori eventually chalked up the experience as an expensive lesson learned, and she now recommends avoiding big chain tax-prep companies altogether. "Doing someone's taxes is a very personal thing and should be personalized," she said. "It cannot and should not be packaged in a one-size-fits-all format these large companies tend to use."
Find Your Tax Professional
Millions of people who take the standard deduction or don't use a true tax pro overpay the IRS. But Dave has a tax ELP in your area who will give you the same personalized, one-on-one service Lori received. Find your ELP today!