Selecting a tax preparer involves putting your trust in an individual who will handle your most private and confidential information such as income details, social security information, deductions, tax credits, and even your bank accounts. An appropriate tax preparer makes the process more efficient and also helps you to be familiar with the filing requirements, while selecting the wrong one can lead to extra expenses, mistakes, penalties, or even uncomfortable moments with the IRS. The IRS cautions you to do your homework when choosing a tax preparer.
In this blog, we will walk you through the red flags that you need to avoid while looking for a tax preparer in order to spot five signs that you should be concerned about before providing your financial documents to any tax preparer.
5 Red Flags to Avoid When Hiring a Tax Preparer
Not all warning signs are indicative of fraud, but there are certain actions that will warrant more questions. The Internal Revenue Service recommends looking into qualifications, asking questions, reviewing the return prior to signing, and selecting an individual who will be available after filing.
1. Promising an Unusually Large Refund Before Reviewing Your Records
The tax preparer will not be able to tell you how much you will get as a refund based on your name, your job, or your refund last year. The answer will depend on your income, the amount of taxes withheld from it, the amount of deductions, credits, and other information that can be obtained from your return. A tax preparer offering a certain or even an exceptionally high refund before seeing your documentation must raise some suspicions.
This is precisely why the IRS explicitly advises taxpayers to beware of preparers who promise unusually high refunds or take advantage of dubious deductions and credits to provide extra money for you. According to the current IRS advice, you have to be wary of preparers who take advantage of new tax laws to promise you credits or deductions.
What to do: Request an explanation of how the estimate of your refund was done and what assumptions were made.
2. Refusing to Provide a PTIN or Relevant Credentials
Most individuals who prepare, or help in preparing, federal tax returns for compensation need a valid PTIN issued by the IRS. For 2026, the IRS has confirmed that those preparers need to have a valid PTIN of 2026 before they start preparing federal tax returns.
Although a PTIN is necessary, it does not automatically qualify an individual to be a CPA, enrolled agent, attorney, or any other professional tax preparer. According to the IRS, paid preparers have different education, experience, and representation rights. CPAs, enrolled agents, and attorneys have unlimited representation rights with respect to the IRS, whereas other preparers might have restricted rights.
What to do: Obtain the PTIN and credentials of the preparer. You can also use the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications to check some of their credentials and qualifications. Just keep in mind that all holders of PTINs are not listed in the directory.
3. Unclear Fees or Fees Based on Your Refund
It is expected that a professional will be able to tell you how much you have to pay and what services are included in the price. Do not trust a preparer who does not give you his fee structure, starts charging extra after completing the tax form, or calculates your fee as a percentage of your tax refund.
According to the IRS, it is wise not to engage preparers who charge according to the size of the refund because it encourages the preparer to claim false deduction or credit.
What to do: Ask about pricing structure before you hire a tax preparer. Inquire about extra charges that may arise for filing a tax return with regard to state forms, more than one source of income, business schedule, amendment, tax notices, etc.
4. Refusing to Sign the Return or Provide a PTIN
The paid preparer must sign the tax return they prepared and add their PTIN number on it. The preparer who fails to sign or give the information required is likely being a so-called “ghost preparer,” which the IRS advises against.
In addition, a taxpayer should never sign an incomplete or blank tax return. Though the paid preparer is held responsible for the accuracy of the information contained in the return he prepares, the taxpayer himself is responsible for the return that is finally submitted in his name. The IRS advises checking the return before signing it.
What to do: Check the return before signing it and ensure the inclusion of the required information of the preparer. Ensure the accuracy of your income, deductions, bank account information, etc.
5. Poor Communication and Lack of Transparency
Filing your taxes through electronic filing doesn't always mean that the process ends there. You may receive an IRS letter, require more information regarding an entry on your tax return, or wish to amend your return. You could even be requested to provide additional documentation in support of a particular deduction or tax credit. When a preparer becomes inaccessible after filing your taxes, things become far more complicated.
The Internal Revenue Service recommends selecting a tax professional that you can reach should questions arise concerning how the return was filed. The IRS also advises engaging with tax preparers that require proper documentation and receipt of figures rather than relying on unverified numbers.
What to do: Ask about your line of communication during and following tax season while in your initial meeting.
Why Is It Important to Avoid These Warning Signs?
Consequences of choosing the wrong tax preparer do not end at the price of preparation. Misinformation can lead to tax liability, fines, interest, delays in processing, or amending the return. At a higher level, taxpayers might find themselves caught up in cases of preparer misconduct.
You Remain Responsible for Your Filed Return
It is important to note that hiring a professional does not mean that all the accountability for your tax return will shift to the preparer. According to the IRS, the taxpayer is the one responsible for ensuring that all information provided on the return is accurate.
If a preparer recommends taking credits or deductions which are unclear to you or cannot be documented, ask more questions prior to doing that. A professional should be able to justify the approach used in filing your return and provide documentation.
Poor Preparation Can Create Problems After Filing
An unfavorable refund may necessitate further action long after tax season is over. This could involve responding to an IRS notice, fixing erroneous data, amending a return, or submitting additional information. It may be challenging to deal with a problem if the original tax preparer cannot be located or is uncooperative.
According to the IRS, ghost tax preparers tend to disappear after filing returns, leaving taxpayers liable for fines or audits.
How to Protect Yourself When Hiring a Tax Preparer
Doing research on the individual before giving out personal financial information is one of the easiest ways to eliminate the unnecessary risks. The IRS has some useful recommendations for taxpayers when choosing a preparer.
Verify Credentials and PTIN Information
Find out if the preparer has an up-to-date PTIN and the credentials they possess. If the individual says he or she is a CPA, enrolled agent, or lawyer, check their credentials through the professional organizations.
The IRS directory can help taxpayers find some qualified professionals and Annual Filing Season Program registrants. Nevertheless, the IRS emphasizes that the directory does not include all paid preparers with PTINs.
Ask Questions Before Sharing Documents
Your consultation should allow you to know how the preparer works. Inquire on who prepares the return, their expertise in preparation of such returns, what documents are required, how the fee is computed, and what procedures are followed in case of any correspondence from the IRS.
In addition, you can also inquire whether they provide electronic filing services and how they secure the taxpayer’s sensitive information. The IRS recommends that taxpayers submit the supporting documentation and the receipt of the preparer.
Review the Return and Keep Your Records
Prior to signing, take time to review the finished tax return and seek clarification on any questions you may have. Verify that all information regarding income, deductions, credits, filing status, dependents, and refund/payment is accurate.
Maintain a copy of the filed return and supporting documents. In the event that you believe there has been preparer fraud or misconduct, the IRS has established steps to report such actions.
By being aware of the warning signs that indicate a tax preparer to avoid when hiring one, it would be easier to make an informed choice before allowing someone access to personal financial information. It is advisable to be careful with a tax preparer who promises an unusually high tax refund without examining the records, refuses to furnish necessary information, charges using vague and refund-related fees, cannot sign the tax return, or who is difficult to contact.
The focus is not only to hire the most affordable tax preparer but also to identify a competent professional who possesses the right qualifications, has experience in the field, has reasonable fees, keeps records safe, communicates effectively, and remains accessible after preparing the tax return.
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