Rubenacker and Company

As people begin to file their 2020 tax returns, taxpayers are reminded to avoid unethical ghost tax return preparers.

A ghost preparer is someone who doesn’t sign tax returns they prepare. Unscrupulous ghost preparers often print the return and have the taxpayer to sign and mail it to the IRS. For e-filed returns, the ghost will prepare but refuse to digitally sign as the paid preparer.

By law, anyone who is paid to prepare or assists in preparing federal tax returns must have a valid Preparer Tax Identification Number. Paid preparers must sign and include their PTIN on the return. Not signing a return is a red flag that the paid preparer may be looking to make a quick profit by promising a big refund or charging fees based on the size of the refund.

Ghost tax return preparers may also:

• Require payment in cash only and not provide a receipt.
• Invent income to qualify their clients for tax credits.
• Claim fake deductions to boost the size of the refund.
• Direct refunds into their bank account, not the taxpayer’s account.

It’s important for taxpayers to choose their tax return preparer wisely. The Choosing a Tax Professional page on IRS.gov has information about tax preparer credentials and qualifications. The IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications can help identify many preparers by type of credential or qualification.

No matter who prepares their return, taxpayers should review it carefully and ask questions about anything that’s not clear before signing. They should verify their routing and bank account number on the completed tax return for any direct deposit refund. Taxpayers should watch out for ghost preparers putting their bank account information on the returns.

Taxpayers can report preparer misconduct to using IRS Form 14157, Complaint: Tax Return Preparer. If a taxpayer suspects a preparer filed or changed their tax return without their consent, they should file Form 14157-A, Tax Return Preparer Fraud or Misconduct Affidavit.

From IRS Tax Tip 2020-20

Most people with gross income of $12,400 or more must file a federal tax return. Some people with a lower income are not required to file. However, these individuals should still consider filing for a refund of federal income tax withheld. They may also be eligible for certain tax credits, like the earned income tax credit, the recovery rebate credit and others.

How to decide whether to file a tax return
In most cases, income, filing status and age determine if a taxpayer must file a tax return. Other rules may apply if the taxpayer is self-employed or can be claimed as a dependent of someone else. There are other reasons a taxpayer must file. The Interactive Tax Assistant can help someone determine if they the need to file a return.

If the answer to any of these questions is yes, a person might be due a refund, but they must file a tax return to get their money.

• Did an employer withhold federal income tax from their pay
• Did the person make estimated tax payments?
• Did they overpay taxes in 2019, and have their refund applied to 2020 taxes?

Some individuals may qualify for the recovery rebate credit
Most people who are eligible have already received the full amount for the recovery rebate credit as Economic Impact Payments. Some people may be eligible to claim the recovery rebate credit if they didn’t get Economic Impact Payments or received less than they were entitled. People must file a tax return to claim the recovery rebate credit even if they aren’t normally required to file. Those who don’t normally file taxes can use IRS Free File to claim this credit. The maximum Economic Impact Payments for qualifying individuals were:

• $1,200 per person and $500 per qualifying child for the first payment
• $600 per person and $600 per qualifying child for the second payment

If they’re eligible for the recovery rebate credit, people will need the amount of any EIPs they received to calculate their credit amount using the RRC worksheet or tax preparation software. Individuals with an account on IRS.gov can view the amounts of the Economic Impact Payments they received.

Choose e-file with direct deposit to avoid delays
The IRS strongly encourages people to file electronically and choose direct deposit to avoid pandemic-related paper delays.

Excerpt IRS COVID Tax Tip 2021-13

Early January 2021, the Treasury Department and the IRS started sending the second round of Economic Impact Payments to millions of Americans as part of the implementation of the Coronavirus Response and Relief Supplemental Appropriations Act.

Taxpayers don’t need to take any action to receive these payments. Economic Impact Payments are automatic for eligible taxpayers who filed a 2019 tax return and those who receive Social Security retirement, survivor or disability benefits (SSDI), Railroad Retirement benefits, Supplemental Security Income (SSI) and Veterans Affairs beneficiaries who didn’t file a tax return.

These second round of payments follow the successful delivery of more than $270 billion in CARES Act Economic Impact Payments to about 160 million Americans in 2020.

Eligible individuals who did not receive an Economic Impact Payment – either the first or the second payment – can claim a Recovery Rebate Credit when they file their 2020 taxes this year. The IRS urges taxpayers who didn’t receive an advance payment to review the eligibility criteria when they file their 2020 taxes; many people, including recent college graduates, may be eligible for a credit.

Eligible individuals who didn’t receive the full amount of both Economic Impact Payments should claim the missing amount as a credit. Anyone who did receive the full amount for both Economic Impact Payments should not include any information about their payment when they file their taxes – they’ve already received the full amount of the Recovery Rebate Credit as advance payments.

For the latest IRS forms and instructions, visit the IRS website at IRS.gov/forms.

You can visit IRS.gov for the latest information about the Economic Impact Payments and filing your 2020 tax return.

Excerpt from IR-2021 Bulletin 12 Jan. 2021