If They Trust Me, Am I Allowed to Do Someone’s Taxes Even If I Am Not a CPA?

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I can still remember my dad every April, receipts and paperwork spread out everywhere, moaning and groaning about the pains of being a small business owner and tax season. Tax season, it seemed (and now I know to be true) can be a complicated mess for many people, in all kinds of careers and financial situations.

Of course, today there are a variety of businesses and individuals, including online platforms, that are available to the consumer in need of some tax-return help. However, most resources do come with a cost. And depending on one’s revenue streams and investments, some returns require more help and more work than a free online resource offers. So, what does one do when they need help? Who can sign a tax return? Is filing taxes for someone else wrong?

Rules About Tax Return Preparation

With a taxpayer’s permission, anyone can take on the responsibility of filing someone else’s taxes. While this freedom is so helpful to so many, there are a few important considerations for both the taxpayer and the voluntary preparer.

Rules of Responsibility

One of the most important rules to remember about assistance with tax preparation is the question of responsibility. In a situation where help is offered and utilized, the responsibility for any mistakes made will always lie on the taxpayer. This is important for both parties to remember, whether you are the trusted advisor or the responsible decision-maker (and taxpayer). Any mistake made is going to hurt the friend who trusted the preparer, potentially causing financial strife and/or relational issues.

Third Party Designee

When assistance occurs, it is best to list the person who helps in the “Third Party Designee” area on the tax return. This area is located just above the area on the return that needs to be signed by the taxpayer. This designation gives the Internal Revenue Service (IRS) permission to speak with the preparer about the return. Unfortunately, these conversations between the preparer and the IRS are pretty limited. In the case of a significant mess up or an audit, the designee likely will not be able to help, even though they prepared the return.

Authorized Representatives

Regardless of who prepares the tax return, there are rules related to who can help in the event of a large mistake or an audit. In this situation, only authorized personnel are allowed to be a “representative” of the taxpayer. Authorized personnel is approved by the IRS (after completion and acceptance of Form 2848); this list of personnel includes attorneys, law firms, CPA’s and enrolled agents. Any of these persons have full power to represent the taxpayer.

Enrolled Agents

In some cases, a voluntary tax preparer may be able to represent the taxpayer. One may become an enrolled agent (a tax professional authorized by the US government) by passing a three part test that is administered by the IRS or if they have prior experience as an IRS employee. Applicants must also pass a background check. These agents are considered elite status and hold one of the highest credentials given by the IRS.

Family-Related Tax Preparation Considerations

There are situations where a family member may have no choice but to help prepare someone else’s tax return. In these situations, the question of “who can sign a tax return?” actually has a different answer. Parents are responsible for the tax returns of their working dependent children. In the event of a family death and no designated executor of the estate, a survivor will have to handle the tax return for the deceased.

Additional (Free) Tax Preparation Options

If the idea of filing taxes for someone else feels a little messy, there are a few different free options for most taxpayers. Eligibility for the different resources often depends on level of income.

Volunteer Income Tax Assistance

Currently, the IRS sponsors a free taxpayer assistance program, Volunteer Income Tax Assistance (VITA), for qualified taxpayers. There are eligibility requirements for the program, including an income level of <$56,000 and/or disability or limited English-speaking capabilities. The IRS offers this online locator tool for locating VITA help. For candidates who do not need complete assistance, there is also a “Self-Prep” option, in which the taxpayer does some of the work of preparing and filing with help from an IRS volunteer.

Tax Counseling for the Elderly

The IRS also sponsors a volunteer program, Tax Counseling for the Elderly (TCE), which offers free tax preparation for eligible candidates. TCE typically works with candidates 60 years and older. They offer extensive knowledge related to pensions, social security and other retirement benefits.

Commercial Tax Preparation Software(s)

There are a variety of online platforms, including TurboTax, TaxAct and H&R Block that offer free tax services. While these options are extremely helpful to many, the free options only work for basic tax returns. Many users often run into some hidden fees or find that their return is not basic – and therefore, not free.

IRS Free File

Free File is a partnership between the IRS and some commercial tax preparation software companies. Eligibility for this free help depends on level of income. Taxpayers who need to pay a state tax return will also not be able to prepare that with Free File.

So Who Should Do My Taxes?

If you are able, the best tax preparer is yourself or an authorized professional. In both of these circumstances, the issue of responsibility for mistakes is less ambiguous than it would be should you use a friend or colleague. However, tax preparation and filing is a complicated process, and there is no question that everyone would like to ensure that they get their full refund. Luckily, there are a variety of resources available to taxpayers today, both paid and free, which are perfectly legal to utilize. This includes the help of a friend or colleague; just be careful to clearly define your working relationship with each other before moving forward.

Laura Mansfield

Master of Healthcare Administration (MHA) | Sacred Heart University

Associate’s Degree of Nursing (ADN) | North Seattle Community College

Bachelor of Business Administration (B.B.A.), Marketing, Sales | University of Washington (Seattle)

January 2020

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