Episode 5 | 11 Mins

Taxes Are Not Magic, A Rant

by | Jan 16, 2020 | 0 comments

With the huge influx of new “tax professionals” it’s important to know the difference between people DO taxes and people who KNOW taxes.

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So y’all I know we talked about in yesterday’s podcast, the things that you want to look out for when you’re hiring a tax repair, you know, the red flags, but I kind of wanted to come back to the people that jump into tax preparation and they really don’t know what they’re doing. And my one of my things that I always say is that there’s a difference between somebody that does taxes and somebody that knows taxes. There are people that really think that tax preparation is all about taking the information from the client, putting it into the computer, and boom, bam, that’s it. That’s not tax prep. That is data entry. There’s a difference between people who know what they’re doing people who are educated about it. People who do their continuing education, they know what they’re doing, they know what they’re talking about. You can ask them questions, they can look at a return and tell you what’s wrong with it. Those are the people that No taxes. The people that do taxes are data entry clerks, the people that if the software doesn’t calculate a credit, that means that you clearly didn’t qualify for that credit, we really might have, it’s just possible that they put something in the wrong spot, but they don’t know enough to tell to be able to tell that you they put something in the wrong spot. And you actually did qualify for that credit. Those are data entry clerks, people who will say something like, well, all I have to do is put this in the software. And you know, the software, let me do it. So clearly I can do it. The software will let you do anything. I can put anything in the software, I can get you a million dollar refund, I can probably get you a $15 million refund, I can probably get you 100 million dollar refund. But if you don’t qualify for it, then it’s going to be wrong. And in some cases, the IRS will accept these returns. are wrong because of the computer that accepts and rejects returns. They don’t look for accuracy. What they look for is is the name spelled right is a social security number, right? Are if we have an amount in this box or on this line should is there an amount on this line, because you know this line corresponds to that line. That’s what they look for. They’re not looking for the they’re not looking at the numbers, and they’re not making sure that those numbers are accurate. So it’s very possible that a incorrect return can get prepared. And it’s very possible that a preparer can have been doing taxes for five years and being submitted all her clients taxes wrong, because she didn’t know what she was doing. But all of the clients returns got accepted and all their refunds got approved, because nobody actually looked at the return. And then when the day when the IRS does start checking the return, now you got all these people that have had all these fraudulent returns being filed for the last five years and now they have all this money back. So it’s really important when you are dealing with a tax professional, when you’re asking people Tax Questions to understand, are they a tax professional? Do they know what they’re doing? Do they know what they’re talking about? Or are they just somebody that takes your W two and puts it in the system? and tells you that your refund is whatever pops out of the system? Can they explain your tax return to you? If you had a huge jump, if your refund in 2017 was $8,000? And your refund in 2018? was $2,000. can I explain to you that a difference will be cut was because your child your children turned 17 you no longer qualify for earned income credit because your income went up the tax cuts and jobs act changed the whole way withholding was so your your withholding went down today know that can I tell you that? Or they just say well, I put everything in the system and that’s what it says. Every year we get more and more people coming into the tax industry that have no clue what they’re doing. They don’t understand tax law. They’re going based off the software. And not only is it troublesome because maybe they don’t realize they put something wrong. software has been incorrect. I work for Turbo Tax during tax season as a tax advisor. There are many times where people have called me and I’m like, yeah, you know, what we does the known issues and software is is is calculating that incorrectly or their outward during this hack during, you know, my nine to five job is as a corporate income tax accountant. I can’t tell you how many times I’ve had to call our software provider and say, Hey, this number is not calculating correctly. It’s not this, this return doesn’t look the way that we expect it to look. Because in my job, we actually calculate all of our returns in Excel so that we know what to do. What the return should look like we know what our bottom line is. And then we put it in the software, the software is a tool. The software is the calculator. I’m the tax professional. I’m the one that knows what the tax law is. The software literally just takes my inputs as subtract, multiply, divide, and boom, puts out a number. I’m the person that knows where things are supposed to go, and what they’re supposed to look like. So I have called our tech software provider several times throughout our tax seasons, and said, Hey, this number thing is incorrect. And they’re like, Oh, well, we have to send it to the developer. And there’s times where the developer will come back and say, Well, this is calculated correctly and I can point to the rules at the at the you know, state or the IRS that says, No, this is not the way it’s supposed to look. But I can do that because I know what I’m doing. If I was just the type of person That relied on the software, I wouldn’t be able to do that. So when you are dealing with people, when you’re asking them questions, we are trying to find a new tax repair. It’s very tempting to go with the person that’s going to get you the biggest refund. But understand that not everybody does doing your taxes, doing your tax return, knows what they’re doing. Sometimes, you’re not supposed to get a big refund. Sometimes, even though you have 10 children, your refund is $200. Because it’s not based on how many kids you have. And sometimes No, you can’t get those extra credits because your income is too high, or your income is too low, or you don’t qualify for these deductions. And no, putting these deductions in this spot doesn’t make it right. So you have to be really careful when you’re talking to people about or when you’re looking at at your new tech. Prepare, don’t go by who’s going to get you the biggest refund because taxes are not magic. If you take the same information, and you go to 10 different tax professionals and you tell them the exact same thing, you should get the exact same number 10 times. That’s it. Taxes are not magic. So if you’re going to 10 different people, and you are giving them the same information, and you’re getting 10 different answers, somebody don’t know what they doing. They don’t, unless they can tell you a reason why your refund is different than everybody else’s. And they can point you to the Internal Revenue Code that supports their reasoning. They probably don’t know what they’re doing. So again, I’ve said this 1000 times Throughout this episode, but be really careful when you’re going through people because I know a now a lot of people are looking for their, you know, their new tax repair, they’re maybe trying to go to, you know, different software maybe trying to do it on their own. And they’re not understanding or you guys are not understanding why your refund is lower than it was last year or why this software is only getting you back this much. And then you went to another software and it got you back a different amount and then somebody is telling you, Hey, you know, I do taxes, I can get you a different amount. Be very, very careful and make sure that your return is accurate, be more concerned with the accuracy of your return than how big your refund is. Because at the end of the day, if you get caught with a bigger refund than you should have. You are the one that’s responsible for paying it back. plus any interest in penalties, not the prepare, not the tax software. You.

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