STOP Believing These 5 Tax Preparation LIES - YouTube

Income tax preparation is a really big business and it's supported by a lot of lies. In this video,

I want to tell you about five lies about tax preparation that you need to stop believing.

Subscribers of this channel know that I'm a mom on a budget and this month I've been

talking about income tax preparation, even though usually I'm talking about household

products like one of my favorite videos is the one I have about Swedish dishcloths that

I'm spreading the joy of Swedish dishcloths around the world. But I'm talking about income

taxes this month because I used to work as a tax preparer and it's something I'm really

passionate about. I really loved working as a tax preparer because I got to talk to people

about money all the time and you know me, I Iove to talk about saving money and different

ways to help people, but one of the reasons I stopped doing it was because I felt... wrong

about the about of money that I had to charge people at this retail tax place to do their taxes.

It just felt like they were only paying this money because they believed a lot of lies

about tax preparation and that's what I wanted to make this video about today. The first

lie that people believe about tax preparation is that you have to be professionally trained to be a tax preparer

and anyone you might be going to see at a tax preparation place is a trained professional.

The truth is that in the United States, the only thing that is required to get paid to do taxes is

that you must have a PTIN number. All a PTIN number is is an identification number and you pay

a fee to the government to get one and when you do that, they will run a background check

on you and they will make sure that you have not been arrested for tax fraud. That's the

only requirement. Is that you need to not be a tax criminal and then you can prepare

taxes for anyone professionally. It does not matter at all what kind of training you have

and in fact, many professional tax preparers have no training at all. When I did it, I

did it through a retail tax training and I did have to go to a training for 5 weeks before

I could start preparing taxes but it was only a 5-week course. Now, I'm not saying that

all tax preparers are not professionals. There absolutely are some out there and in my retail

office, there were some people that had been doing taxes for over 20 years and they were

excellent at what they did and very experienced. But, I'll also tell you that those tax preparers

were the ones that were booked up ahead with appointments from the year before and getting

in with those very experienced tax professionals was very difficult. If you just walked into

the office, you were much more likely to get someone like me, who was a total newb and

just started doing taxes. So just be aware that you don't know what you're getting when

it comes to paying for a tax preparer. All right, the second lie that people believe

about tax preparation is that going to a person to prepare your taxes is always going to be

better than just using software. Well, I hate to tell you, but those people are using software

that's pretty similar to what you could use on your own. And the only difference is that

they're going to talk to you and talk you through those questions as opposed to in the

software, you'll just click a button to answer those questions. But it's the same questions.

It's the same kind of interview. And a lot of times, those questions are pretty simple.

They're questions like, "Are you married?" "Did you earn income from investments this

year?" You probably know those answers. And what they can do with your taxes is only as

good as the documents you bring in. They're not going to magically come up with receipts

from things that you didn't find. You have to bring them the documents and they better be organized

or the tax preparer is not going to able to do anything with them anyway. So in most cases,

there's not a big difference in going to a person versus just using software on your

own. Now the only exceptions to those rules are people who have extremely complicated

taxes and you do need a professional to talk you through it but those are pretty rare.

Those would be situations like clergy members, farm owners, people who have many separate

state and local taxes that they need to deal with, or on-the-road truckers are another

example of ones that are really complicated. But if you don't fall into one of those situations

that have super complicated taxes, you're going to be just fine using the tax software.

And I'll tell you a little secret from when I was working as a tax preparer. We offered

this double-check thing where we'd see if you did your taxes somewhere else, we'd try

to do them ourselves, see if we could find you any more money. And if somebody walked

into the office and they'd done their taxes with one of the online software like Turbotax

or something like that, we would honestly kind of groan because we knew that there was

no way we were going to find them anything that they didn't already find. Once in a while,

we would find something by asking them about something they didn't think about. Like we

might remind them that they could deduct their college tuition expenses and maybe they had

forgotten to do that in the software. That is the only time we found any difference between

our preparations versus the tax software. The third lie about tax preparation that so

many people believe is that taxes are super complicated and they're only getting more

complicated, year after year. The truth is we just recently had some changes to our tax

laws that actually made taxes a lot less complicated for a lot of people. The tax law that passed

in late 2017 made big changes to the standard deduction and the thing that it really means

in real life if that 90% of Americans now take the standard deduction instead of itemizing.

What that means in practical terms is that you don't have to keep receipts for things

like your medical expenses, your real estate taxes, your charitable donations, because

all those things are part of itemizing your deductions, but the vast majority of us are

not itemizing. So it just makes doing your taxes a whole lot easier than they might have

been a few years ago. The 4th lie that people believe about tax preparation is that you

have to pay for good help with your taxes and that's simply not true. If you're already

using tax software, there's probably some built-in help that you can get. There's definitely

documentation, but a lot of times there's also a chat available or a phone line you

can call. But if you don't have that, you can actually reach out to the IRS themselves.

Now a lot of people think that sounds really scary, but as a tax preparer, that's actually

what I did if I had some question that I couldn't find the answer to. I would call the IRS.

They have a helpline with people who are extremely helpful. Their whole job is to help you do

your taxes correctly. And you can call them and get all kinds of help. And if that's not

enough, you can actually make an in-person appointment with your local IRS office. And

again, they're helpful people that are there just to help you do your taxes. There are

also some great volunteer services out there. VITA is a big one for lower-income families.

You can have a real person sit your down, help you do your taxes for free. AARP also

offers some excellent services. And both of those services actually do require their tax

preparers to be pretty well trained. You're probably going to get a better volunteer tax

preparer than you'd get at some of the retail tax places. Hey, sorry to interrupt. I really

hope you're enjoying this video about tax preparation. If you did, I'd really encourage

you to give this video a like. It takes a lot of work to make these kinds of videos.

And if you want to see more great content like this, I'd really encourage you to subscribe

and turn on the notifications. It helps me out and it means you'll never miss any future

videos. All right. Get back to the content. OK, our 5th and final lie that people believe

about tax preparation is that the IRS is scary. And as I talked about in the last one, they're

really not. They're actually quite helpful in a lot of cases but a lot of people are

also really scared of tax audits. And that's how the tax preparation companies can sell

all kinds of expensive services about tax audit preparation and tax audit defense and

the reality is that if you make less than $200k and don't own a business, your odds

of getting audited are 0.4%. It's very rare. And the reason that the IRS doesn't audit

people anymore is because they have computer systems that can quickly check. Does your

w2 numbers match what's on your tax return? And if they match, why would they need to

audit you? And so they can track so many more things with the computers and they can check

that things are right so many times. Most often, when there's some sort of audit, it's

because something is a little out of the ordinary. For example, if somebody has a really big

tax credit. Like for example, the adoption credits can be up to $14,000, so those do

get audited more than many other things, but the way an audit works frequently is they'll

send a letter to someone who claimed that adoption tax credit and they'll just ask for

more documentation. And if you took that kind of tax credit, you're going to know to be

prepared for that. You send in your documentation and that's it. If you're not trying to do

anything illegal with your taxes, there is no reason to fear the IRS. They're really

not big and scary. They're just people who are trying to help people do their taxes correctly.

There's nothing to fear. And stop spending money because you're afraid of the IRS. I

really hope you enjoyed this video about lies about tax preparation. If you did like it,

please click the like button. Click the subscribe button. And I hope to see you around in the

next one.