New Tax Preparer: Fears

General
1

Hi everyone! I recently got a job with a local Jackson Hewitt office and I have some potentially irrational fears.

It was my third day and I feel so unprepared. I have only had a few hours of hands on training, along with completing the company and IRS required courses. I’m still in training apparently, but will now be with another staff member (also new) to do tax returns without any supervisor available.

Here’s my concern -

What if I make a mistake and end up being fined or imprisoned? This is temporary and I am only working this job to earn some extra cash before my baby is born in April. Afterwards, I will be re-entering the insurance world (auto, home, life, etc). My concern is that an unintentional error made will affect my life and risk my career in insurance.

Thoughts? Irrational or valid fears? TIA!

2

You aren’t going to prison for a mistake or error.

You can face fines for due diligence lapses, so always be sure to ask questions of and get documentation from the client to ensure they qualify for a particular benefit, especially Head of Household, Child Tax Credit, Earned Income Credit, and American Opportunity Credit.

Document the client responses, word for word.

If you make an error, the client may be upset, but the firm should make it right by correcting the return. The chances of this are lower if returns are reviewed prior to being transmitted.

3

First off, you will not be imprisoned unless you are committing fraud. Are you making up a side business for your clients so they qualify for the earned income credit?

As far as penalties go, are you signing the returns? If you don’t really understand them as a whole, you shouldn’t be signing them. Someone else should be reviewing and signing them.

Stress. The first year will be really stressful if you are working full time. I worked in several public accounting firms and it is not uncommon for new hires working long hours to cry once during their first busy season. It can be a stressful / intense job. Working at a 1040 mill like Jackson Hewett might be less intense.

4

I think your feelings are completely valid - I think it’s just wild that companies are throwing totally new preparers out in public with no support. It also sounds like the returns you prepare won’t be reviewed? That’s such an important method for catching mistakes.

As far as your fear of going to jail or facing criminal charges - that pretty much only happens to people who deliberately file fraudulent tax returns and/or steal from their clients. If you aren’t a credentialed tax professional (CPA, Enrolled Agent, tax attorney) then IRS basically can’t sanction you as a preparer unless they can prove you intentionally committed a crime.

I imagine that you’re going to be dealing with a lot of clients who can claim Earned Income Credit and file as Head of Household. You do need to be thorough in your due diligence to make sure the taxpayers qualify for these credits and/or HOH status. Was this part of your training?

This part is difficult to learn through training, because you’ll need to learn how to ask questions in a way that gets honest answers. If you just ask someone their filing status they’ll say Head of Household, even if they don’t actually benefit from that. A lot of people think they have to file as HOH in order to claim a child, but that’s not a requirement. I saw this a lot when I used to volunteer with VITA.

I don’t know much about the insurance industry, so I don’t know if there’s any risk for your career by working at JH.

Hopefully you’ll have a good experience and not feel forced to prepare tax returns you don’t feel comfortable with. Good luck!

5

@Keaton
May I ask you a somewhat off tangent question? How would you treat a situation where one parent is divorced and has the child most of the time, but child and spousal support (which aren’t part of the tax return for the receiver of course) make up over half of the household’s budget? As in, they wouldn’t be able to make rent if not for child support. A friend is in this situation and I got super curious! She has no qualms and files HoH.

6

@Rey
It’s not off tangent! So from what I can remember off the top of my head is that spousal support would be considered support provided by your friend - it is money given to the spouse - and child support would be considered support provided by the other parent. It should be designated in their agreement how much is spousal support and how much is child support.

If she were to get audited, she would need to include a complete copy of the divorce agreement and IRS would check the math to see if her income plus spousal support was enough to cover more than half the costs of keeping up the home.

7

@Keaton
Thank you so much! Obviously I can’t ask her for details but I was very curious. She was telling me that the moment she gets child support it becomes “her” money for these purposes but I was like ummm I’m not sure! Lol

8

An said:
This makes customers feel uneasy. How can we trust those companies do our tax.

Ask for an appointment with the most experienced preparer. If there is an Enrolled Agent (credential received from the IRS) at the office, ask for that tax pro.

9

An said:
This makes customers feel uneasy. How can we trust those companies do our tax.

You can’t, really. I say this as a regular person. Even seasoned tax pros have told me things that were plain wrong. My friend’s husband has found errors in returns prepared by pros and he now does it himself, having studied the issues pertinent to him.

10

New preparers make plenty of mistakes. None of them are fined or imprisoned. Do your best. You will learn quickly.

11

Been there, I will say it’ll get better with experience but that doesn’t really help the first few dozen or so returns. If your experience is anything like mine, here’s a few things that may help

  • Go to the primary source if you’re not sure. The 1040 instructions are written for your average person. There are many a times where I just spent the 5-10 minutes (that seems like an eternity with the client there) looking at a specific line instruction and not only does it explain it, it gives you and the client peace of mind.

  • Really strike a balance for your “ask a senior life lines”. I think of those as I already did #1 above and it could go either way. You will run into those situations but if it’s happening too often, there’s something else going on.

  • The person scheduling your appointments should match you with the appropriate person. If you’re starting out, you shouldn’t get the split custody parent who’s running a rental property. That being said, I imagine gig work and family situations are what they are, and if 90% of your clientele fits those categories then there’s not much what the front desk can do.

  • Probably the most important. Never compromise your ethics. The tax prep industry is what is it, and clients don’t make it easier on themselves either. There’ll be plenty of opportunities to help the company screw the client or help the client to screw “the system”. Do your due diligence and I always thought of it as if I can sleep at night if that return was my own.

Once you get into a rhythm, most of them will be pretty straightforward and you will know what to look for. I will say you probably won’t be comfortable if you just do one season just because those early returns will be more memorable. Hope it helps

12

Oof, that’s not a lot of training. But most people who start doing taxes don’t have a lot. It is bullshit that your supervisor isn’t there. You’re probably not going to prison for mistakes. Your employer will get fined, and you might be fined. You could go to prison for willful negligence. If you don’t know the answer to a question or a topic, then look it up. The Pub 17 should tell you 90.0% of what you need to know. Tell the person checking your work, and if in doubt set it aside for the supervisor to check later.

All new timers have this feeling and it goes in 4 stages:

1.) Absolutely pants filling, terror.

2.) Excitement on a few easy returns - “I could do this all day”

3.) That hard return that takes 3-5 hours to complete - “I have no idea what I’m doing”

4.) I am a tax god - "I can do anything, bring me your Schedule F’s)

Then you get through your 2nd or 3rd season and you understand that everything you know is basically just scratching the surface and there is so much more to taxes that is buried deep down, and you’ll likely either have to dig into that black hole, and hopefully come out the other side, or give up.

Most returns are fairly simple. Single filer, a couple of W-2’s maybe, a 1099-K. So you’ll be filing a schedule C, or Other income (depending on if it’s a job or a hobby).

Most of the time, it’s a business.

You will occasionally get some difficult ones. where you need to pull as much info out of the client as possible to answer the questions. The PUB 17 is filled with flow charts to help you make your decision. Sometimes the client wants to lie. Remember, you can refuse service for someone who is not being truthful.

The most likely ones I’ve seen.

Making up cash income for EITC.
Making up deductions that have no basis for business expenses.
Adding children that are not theirs to add.
Attempting to apply credits that they do not qualify for.

Usually when I see someone coming in from a paid preparer, the most common things missed:

State specific credits like the Homestead.
State specific retirements are handled poorly.
Federal/Municipal bonds being taxed incorrectly.

Occasionally I see just outright fabrication (dependents, income, deductions) these tend to happen most often with English as a second language clients. It’s done to boost the return to get a larger pay out.

13

You sound very conscientious, which is awesome! I just received a notification from the IRS about a free one-hour class provided by them that might be helpful to you, if you have the time available to take it (or they also record these for later viewing).

https://www.webcaster4.com/Webcast/Page/1148/51848

14

Posts like this surely aren’t good publicity for J-H.