What Does an Income Tax Preparer Do?

Filling out a tax return can be a challenging task. What’s more, unless you’re a tax expert, you may be unaware of how you can use tax laws to reduce how much you pay to the Internal Revenue Service. That’s why, come tax season, many people enlist the help of a tax preparer.

What does a tax preparer do? Services run the gamut from ensuring documents are mistake-free to spotting and claiming potential tax benefits to filing income tax returns on behalf of their client.

Here’s a look at the different types of income tax preparers, the pros and cons of hiring one, and under what circumstances they can help their clients pay less to the IRS.

What Is an Income Tax Preparer?

A tax preparer completes and files income tax documents and forms for clients. People use tax preparers because they are experts in tax rules and know how to use those rules to claim deductions or credits on tax returns.

That’s why, according to a survey by The College Investor, 27% of Americans use either credentialed or non-credentialed tax preparers to complete and file their tax returns.

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Recommended: What Are the Different Types of Taxes?

Credentialed Tax Preparers

Credentialed tax preparers tend to work full time on tax- and accounting-related tasks. There are three types of credentialed tax preparers: Certified Public Accountants (CPAs), Enrolled Agents (EAs), and tax attorneys. CPAs receive certification from state boards, EAs receive certification from the Internal Revenue Service (IRS), and state bar associations license tax attorneys.

CPAs

CPAs are certified by a state government as having the required expertise to maintain financial records, certify financial statements, and conduct tax and financial audits.

CPAs must pass the Uniform Certified Public Accountant Examination, a comprehensive test given by the American Institute of Certified Public Accountants. Most states require CPAs to pass an ethics exam and stay up to date on changing accounting and tax laws.

CPAS can also represent clients on tax and IRS issues, such as tax audits, payment and collection issues, and appeals.

Enrolled Agents (EA)

An EA obtains licensing from the IRS to represent clients before the IRS. To become an EA, an individual must pass the IRS’ Special Enrollment Examination or have qualifying work experience if they were an employee of the IRS. Once certified by the IRS, EAs are required to stay up to date on changes in the tax law by completing at least 16 hours of continuing education each year, or 72 hours of continuing education every three years.

Tax Attorneys

Tax attorneys specialize in tax law, advise clients on the legal aspects of their taxes, and prepare their clients’ tax returns. They can represent their clients before the IRS on all tax matters. Tax attorneys have a law degree, have passed a state exam, acquired a state license, and keep up with updates to the tax code through ongoing education.

Non-Credentialed Tax Preparers

Non-credentialed tax professionals are not licensed or certified by a third-party organization and tend to be self-taught. These individuals may have worked for a tax store during tax season but may not be involved in tax-related work full time.

Non-credentialed tax preparers include Volunteer Income Tax Assistance (VITA) program volunteers, tax accountants not certified by the American Institute of CPAs (AICPA), and Annual Filing Season Program participants.

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What Does a Tax Preparer Do?

In addition to preparing, completing, and filing tax documents for their clients, income tax preparers also advise their clients on how they can reduce their tax liability in the coming year.

Preparing tax documents and returns requires calculating tax brackets, credits, deductibles, and liabilities. However, income tax preparers are also responsible for making sure tax reports comply with government tax rules and regulations. For example, there are strict due diligence requirements when certain tax benefits are claimed, such as earned income tax credit, or when an individual claims head-of-household status.

Following due diligence requires interviewing clients to verify the information they are providing, such as earnings, tax withholdings, and dependents, to gather supplemental documentation that back up the claims.

Recommended: What Tax Bracket Am I In?

How Much Does It Cost to File Taxes with a Tax Preparer?

How much you pay a tax preparer depends on who you use and what services they provide. For example, credentialed tax attorneys and CPAs will likely charge more than a seasonal worker or non-credentialed preparer. A credentialed preparer will also have more expertise and can take on more complex tasks, such as representing the client in tax resolution cases.

A tax preparer might charge a flat fee for a tax return or an hourly rate. Also, the more complex your taxes, the more a preparer may charge.

Here are some of the fees charged in 2020 (the latest data), according to a National Society of Accountants study:

•   The average fee for Form 1040 with the standard deduction, plus a state income tax return, was $220.

•   The average fee for preparing Form 1040 with Schedule A to itemize personal deductions, plus a state income tax return, was a flat fee of $323.

•   The additional fee for Schedule C for a business or sole proprietor was $192.

•   The additional fee for Schedule D to report capital gains and losses was $118.

•   The additional fee for Schedule E to report rental and other income and losses was $145.

Where you live can affect the amount charged by a tax preparer. Fees tend to be higher on the West coast and in New England, and lower in the Southeast.

Wondering how to cover the cost of a tax preparer? A spending app can help you create budgets, organize your spending, manage bills, and more.

Pros and Cons of Hiring an Income Tax Preparer?

There are several advantages to hiring an income tax preparer, though there are some potential disadvantages, too.

Pros

•   Using a tax preparer could save you time.

•   Using a tax preparer minimizes errors on your return, which can help protect you from an audit.

•   You may save money if the tax preparer finds ways to reduce the amount of tax you pay.

•   The cost of using a tax preparer is often deductible.

Cons

•   The cost of working with a tax preparer may be high if your taxes are complex.

•   It might be difficult to find an available licensed tax preparer during tax time.

•   A non-credentialed tax preparer may not be able to take the time to fully understand your situation.

•   Some tax preparers could be frauds, so always check their credentials.

What Are the Job Requirements to Become an Income Tax Preparer?

A credentialed income tax preparer typically has a degree in finance or accounting. They also must have a thorough knowledge of the tax system and be up to date on the latest rules and changes. Tax preparers must also be familiar with tax software, Excel, and other tools and information resources.

What Skills Do Tax Preparers Need?

Tax preparers need to be skilled with numbers and in dealing with clients. They are required to interview clients and ask them sometimes intrusive questions to verify that the information they are providing about income and lifestyle is true.

Tax preparers must also have in-depth knowledge of the tax code and the tax benefits that apply to various situations and be able to apply those rules using their analytical and mathematical skills.

When Is Hiring an Income Tax Preparer Worth It?

As you’re preparing for tax season, you may want to consider hiring an income tax preparer if your situation is complex or there are tax benefits that you could qualify for. This might be the case if you are a business owner or self-employed; have diverse investments or rental properties; bought property during the tax year; or had a major life event, such as marriage, a birth or adoption, divorce, retirement, or inheritance.

If you have had issues with the IRS in the past or are under audit, you should also use a tax preparer. This is because a professional knows how to navigate the IRS’s rules to your advantage and help you understand the options open to you.

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The Takeaway

Not everyone can afford to hire a tax attorney or a CPA to help them with their tax returns. However, if you are a business owner, an independent contractor, or have experienced life events that make your tax situation complicated, hiring a credentialed tax preparer could help save you money in the long run.

Not all income tax preparers are the same, so if you choose to hire a tax preparer, make sure you choose a reputable one by checking with the Better Business Bureau for complaints and verifying their credentials. The IRS’ Directory of Federal Tax Return Preparers can be a good place to start.

Whether you owe taxes or are getting a refund, using a money tracker app can help you manage your money. The SoFi app connects all of your accounts in one convenient dashboard. From there, you can see all of your balances, spending breakdowns, and credit score monitoring, plus you can get other valuable financial insights.

Stay up to date on your finances by seeing exactly how your money comes and goes.

FAQ

What are the responsibilities of a tax preparer?

Tax preparers are responsible for completing and filing tax forms for their clients. They are also responsible for ensuring the forms are accurate and the information provided by their clients is truthful. This often requires interviewing clients and collecting supporting documentation. Tax preparers also provide tax strategy advice to clients to help them to pay less tax in the future.

Can you make good money as a tax preparer?

Tax preparers’ salaries vary depending on whether they are credentialed and where they live. According to the Bureau of Labor Statistics, in 2021, tax preparers in general earned an average of $51,000 a year. However, licensed CPAs earned an average of $77,250 a year, and tax attorneys earned around $128,000 a year.

What is the difference between a CPA and a tax preparer?

A CPA is typically better qualified than a tax preparer. A CPA not only has accounting credentials, but they are also certified as a tax specialist by their state board. A tax preparer who is not a CPA, EA, or tax attorney is uncredentialed and may only have worked part time on taxes during the tax season.


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SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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What Is Generational Wealth, and How Do You Build It?

Whether you want to retire a few years early or feel more financially secure, building your wealth can help you meet your financial goals. But what if you want to build generational wealth, or the type of lasting wealth that can be passed down to your children and grandchildren? While there is no one-size-fits-all path, there are some steps you may consider taking to start accumulating generational wealth.

What Is Generational Wealth?

Generational wealth refers to anything with monetary value that’s passed from one generation to the next. This might include cash, property, investments, jewelry, family businesses, or other financial assets. Typically, this type of wealth sets up future generations to financially benefit from what previous generations built.

Over the past 30 years, the generational wealth gap in the United States has been widening. What is a generational wealth gap? This simply refers to the difference between the wealth one generation accumulates relative to the wealth another generation accumulates. Factors such as income, education, race and ethnicity, age, and generation could all impact how much wealth someone builds and how much they’re able to pass down to the next generation.

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Why Is Generational Wealth Important?

Whether you have new money or old money, building lasting wealth can help your family remain financially stable in the long term. This in turn could help give future generations a leg up in life. After all, when you don’t have to live paycheck to paycheck or stay in an unsatisfactory job, you tend to have more options in life. If you’re the one passing on the wealth, you can have the satisfaction of knowing you’ve helped give your children and grandchildren that level of freedom.

Pros and Cons of Generational Wealth

Generational wealth comes with clear advantages along with some potential drawbacks.

Pros

•   Future generations can enjoy some degree of financial security.

•   Generational wealth can provide support and resources for family members who are just starting out.

•   The extra financial assistance can help create room for innovation and free up family members to pursue their dreams.

•   It’s an opportunity to solidify your legacy.

Cons

•   Those who inherit wealth often have a responsibility to manage the money so there’s enough for the next generation.

•   Anticipating an inheritance could cause some people to lose the motivation to work hard and build their own wealth.

•   Some families lack a clear plan for transferring wealth from one generation to the next.

Whether you’re building wealth or managing it,

How to Start Building Generational Wealth

When it comes to building lasting wealth, there’s no strategy or template that will work for everyone. A spending app can give insights into your financial picture, which can help you keep your finances on track. Here are other steps you can take to better position yourself and your family.

Focus on Education

Generally speaking, education increases your earnings and reduces unemployment. But having a financial education is important, too, especially if you want to create and grow generational wealth. Discuss financial topics with your children and younger family members and pass on what you know. That way, they can be better prepared to manage the wealth they inherit.

It’s Never Too Early to Start Saving

Accumulating financial assets takes time and planning, so consider starting early. Building wealth in your 30s, for example, is possible and something you can continue to build upon as you get older. It’s also a smart idea to save consistently. By setting aside a certain amount on a regular basis, you can make the most of compound interest, which is interest that’s earned on the initial principal and the interest that accrues on it.

In addition to your paycheck, you may be able to passively earn money. This is money you make without active involvement. If that’s an option you want to explore, it can be quite useful to know how to manage passive income streams.

Make a Plan With Family Members

Considering working with other family members to build and preserve generational wealth? It’s a good move to discuss short- and long-term goals and strategies with them so you’re all on the same page. As part of those discussions, you may also want to decide how the money will be allocated.

Consider Home Ownership

Home ownership for generational wealth is another strategy to explore. When you buy a home and its value rises, you can sell it for a higher price and possibly use that money to move into a larger home or invest in other assets. Not planning to sell any time soon? You could still benefit from price appreciation, as it adds to your home equity and overall financial assets.

Explore Investment Opportunities

Investing could help your money grow over time, even if you start out small. Your investment strategy will depend on a number of factors, including your goals, how much you have to invest, your tolerance for risk, and your age.

Although no two situations are ever alike, there are nevertheless best investment strategies for each generation. People who dream of an early retirement, for instance, may subscribe to the “financial independence, retire early” (F.I.R.E.) movement. Achieving this goal may call for a more concentrated investment strategy.

Recommended: Pros & Cons of the F.I.R.E Movement

Protect Your Wealth

Having a team of trusted financial, tax, and legal experts on your side can help you protect your growing wealth and maximize the amount you’re able to pass along. You may decide to create a trust or estate plan, for example, which details how you want your financial assets to be distributed and invested and designates a trustee.

What Are Some Challenges to Building Generational Wealth?

Not surprisingly, building and maintaining generational wealth doesn’t typically happen overnight. It’s often the rest of years of hard work and planning, and it helps to understand how to strategically save, invest, and spend. Depending on how much you already know, achieving this level of financial literacy can take time.

Another potential challenge is creating a clear plan for how the wealth will be transferred from one generation to the next. Some families avoid having conversations about money, and there’s a chance not everyone shares the same vision for how the wealth should be distributed.

In addition, disparities in pay among different racial and ethnic groups and genders could impact each generation’s ability to grow and maintain generational wealth. According to the Department of Labor, White and Asian-Pacific Islander workers earn more on average than Black, Hispanic/Latino, Native American/American Indian, and multiracial workers.

How to Pass Down Generational Wealth

There are steps you can take to ensure your financial assets are handed down the way you want. Creating an estate plan, for example, can help ensure the assets are distributed according to your wishes. Establishing a trust lets you set the terms over how assets are managed and can help your heirs bypass the probate process and potentially lower their tax burden. When you’re creating an estate plan or a trust, you will likely want to enlist the help of a professional, such as a trust attorney. These professionals can help ensure the right legal documents have been created and signed and will be easily accessible to your heirs when the time comes.

Recommended: The Difference Between Will and Estate Planning

The Takeaway

What is considered generational wealth? As the name implies, it’s financial assets, such as cash, jewelry, real estate, investments, and more that are passed down from one generation to the next. Generational wealth can give heirs a sense of financial security and more freedom to pursue their dreams, though it often comes with a responsibility to manage the money so there’s enough for the next generation. There are potential ways to start building your wealth, such as focusing on education and financial literacy, saving consistently, exploring investment opportunities, considering home ownership, and taking steps to protect what you’ve earned.

As you’re creating your savings plan, you may find it helpful to use a money tracker app. The SoFi app lets you connect all of your accounts in one convenient dashboard. From there, you can see all of your balances, spending breakdowns, and credit score monitoring, and get other financial insights to help you build your wealth.

Stay up to date on your finances by seeing exactly how your money comes and goes.

FAQ

How do you build generational wealth?

Although no two paths to generational wealth are exactly the same, strategies often include a focus on education to prepare for a higher-paying job and to gain financial literacy, saving early and consistently, investing in a home or other real estate, and making sound investments. It’s also a good idea to work with a professional to create an estate plan or trust so your financial assets are more efficiently passed along to the next generation.

What are examples of generational wealth?

Generational wealth can include cash, investments, jewelry, and other financial assets. This can but doesn’t have to include a family business.

How does a family start building generational wealth?

As a family, it can make sense to discuss goals for generational wealth and brainstorm strategies to achieve them. You may also want to talk about how the wealth will be distributed and make sure everyone is on the same page. It’s also important for you and the next generation of your family to understand how to strategically save, invest, and spend, so whatever wealth that’s passed down can continue to grow.


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SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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My Tax Preparer Made a Mistake — What Can I Do?

Hiring a tax preparer can give you some peace of mind that your taxes are being filed correctly. But even a pro can sometimes make a mistake. Depending on the error, you could end up getting a refund you’re not entitled to or paying more in taxes than you actually owe.

The good news is, there are ways to get your tax return back on track if an error was made. Keep reading to learn what steps you can take when you realize your tax preparer made a mistake.

Who Are Tax Preparers?

There are different types of tax return preparers, but typically, they’re enrolled agents, attorneys, or certified public accountants (CPAs). There is no professional credential that qualifies someone to be a tax preparer. However, they do need to have an IRS Preparer Tax Identification Number (PTIN) in order to help clients file their tax returns.

Because a tax preparer is dealing with your sensitive financial information, it’s important to do your due diligence before hiring one. Research potential tax preparers’ backgrounds and references, and if possible, ask for referrals from trusted friends and family members.

It’s also a good idea to look for a tax preparer who specializes in the types of taxes you need help with, such as self-employed taxes.

Pros and Cons of Working With a Tax Preparer

Thinking about enlisting the help of a professional as you prepare for tax season? You may want to consider the advantages and disadvantages of working with a tax preparer.

Pros

•   Ample experience (if you hire the right professional)

•   Expert insight into potential tax credits and deductions

•   Peace of mind that your taxes are filed properly

Cons

•   May be more expensive than doing your own taxes

•   Mistakes can still happen

•   Less privacy

Recommended: How Much Do I Have to Make to File Taxes?

Are Tax Preparers Worth It?

Whether or not a tax preparer is worth the money depends on a few different factors. These may include:

•   How much time it saves you. If you have complicated taxes or are concerned you might miss the tax filing deadline, you may find that an hour or so with a professional tax preparer is more efficient and therefore worth the cost.

•   The complexity of your taxes. People who only have one source of W-2 income, take the standard deduction, and have no investments may be able to easily file their taxes without the help of a tax preparer. However, a small business owner dealing with payroll or a freelancer with dozens of sources of income may find that hiring a tax preparer could save them a lot of headaches.

•   The tax preparer’s experience. An experienced, qualified tax preparer can ensure your returns are prepared correctly and perhaps even help you identify tax credits or deductions.

•   Cost. Some tax preparers charge the same or slightly more than the cost of purchasing tax preparation software, while others are on the more expensive side. Depending on your needs, hiring one may or may not be worth budgeting for.

Fixing Errors on Filed Returns

If you realize your tax preparer made an error on your filed tax return, all is not lost. You can amend it using Form 1040-X, Amended U.S. Individual Income Tax Return. Common errors include having the wrong information regarding income, credit, tax liability, filing status, or deductions.

It’s also possible to amend a return in order to claim an unused tax credit. Generally, mistakes on income tax return need to be amended within three years (this includes extensions).

Am I Responsible if My Tax Preparer Makes a Mistake?

While it may seem like the professional tax preparer would be on the hook for any mistakes made on income taxes they help file, it’s the taxpayer who’s held responsible. However, the tax preparer can help make any necessary corrections.

What Happens if a Tax Preparer Messed Up Your Return

If you realize your tax preparer made a mistake (or multiple) on your income tax return, you need to file an amended return with the IRS. Ideally, the tax preparer would help with this process, but they aren’t required to do so.

What to Do if a Tax Preparer Messed Up

Mistakes happen. Here are the steps you can take to get things back in order in the event your tax preparer makes an error on your income tax return.

Make Sure It’s the Preparer’s Fault

Before you start pointing fingers at the tax preparer, make sure they’re the one who made the mistake. Tax preparers require a lot of detailed information so they can file an income tax return on your behalf, and it’s easy to give them the wrong information by mistake. Do some digging to see who’s really at fault.

Recommended: What to Do If You’re Missing Tax Documents

Check Your Contract

Once you’re certain the tax preparer made a mistake, take a look at the contract you signed with them. It should outline whether the preparer will file an amendment for you at no extra charge and what their liabilities are.

Contact the Preparer

The next step would be to contact the tax preparer to alert them of the mistake and to provide them with any related correspondence from the IRS.

Notify the IRS and Professional Organizations

If the mistake is substantial — and not your fault — you’ll need to convince the IRS of the tax preparer’s negligence. You may also want to outline any damages you’ve suffered as a result of the error. The IRS is then responsible for investigating who is responsible and if the tax preparer is at fault, this can result in their tax identification number being rescinded.

It’s also possible to report the tax preparer to a professional organization they belong to, like the American Bar Association or the American Institute of Certified Public Accountants.

Tell It to the Judge

Ideally, the tax preparer will help you remedy the mistake, and everyone can go on their merry way. However, if the error caused a lot of issues for you, you may choose to sue for negligence. Taking the issue to a judge is a last resort, but it’s an option if you want to file a standard professional malpractice complaint with your state court.

Recommended: Free Credit Score Monitoring

The Takeaway

Even the most qualified tax preparers can sometimes make a mistake. If a tax pro made an error on your tax return, all is not lost. The IRS allows you to fix errors on an income tax return, and in most cases, your tax preparer should be willing to help out. If you suspect the preparer was negligent when filing your return, you can report them to the IRS. As a last resort, you can even sue them (though hopefully it would never come to that).

One way to make getting ready for tax season easier is to gain a holistic picture of your financial life. A money tracker app like SoFi’s can allow you to track spending, set financial goals, and view all bank account balances in one place. You can also monitor credit scores.

Get the information and tools you need to make the most of your money.

FAQ

Is a tax preparer liable for mistakes?

At the end of the day, even if the tax preparer is the one to make the mistake, the taxpayer is the one held liable by the IRS. That said, some contracts with tax payers do include taking responsibility for errors.

How much money will the IRS fine a tax preparer who has made a mistake filing a client’s taxes caused by lack of due diligence?

Simple mistakes are one thing, but if a professional tax preparer doesn’t follow tax rules, regulations, or laws, they can be penalized financially by the IRS. How much that fine is depends on different factors like how many violations occurred.

Can you report a tax preparer to the IRS?

Yes, it is possible to report a tax preparer to the IRS. It’s important to submit a detailed report to the IRS and to outline any damages suffered.


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SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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40+ Creative Ideas to Make Extra Money at Home

Ideas for making money at home are everywhere. And some of the best ones revolve around things you can do online or off, using skills and experience you already have.

Figuring out which money-making idea works for you often depends on how much time you have and how much extra income you’re interested in generating. You might start a side hustle, explore small business ideas, look for passive income options, or get a full-time remote job.

Need some inspiration? Here are more than 40 options to consider.

40+ Creative Ways to Make Money

Creative thinking is key to finding different ways to earn an income, especially if your goal is to learn how to make money with no job. Some of the easiest ways to earn extra cash from home are selling a service (i.e., your time and skills) or selling a product.

Can you earn money online without selling anything? Absolutely, and there are plenty of ways to do it. We’ve broken down some different ideas by category to help you find your perfect money-making idea.

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Money-Making Craft Ideas

Selling handmade crafts can be an excellent way to turn a hobby into a side hustle or full-fledged business. You don’t necessarily need to be an expert artisan to get started.

Craft trends come and go, but here are some classic products to consider trying:

•   Crocheted items, such as scarves or baby clothes

•   Handmade soap

•   Handmade candles

•   Bath bombs and bath scrubs

•   Paper goods

•   Jewelry

•   Lip balms

•   Home decor items

•   Lamps and lighting

•   Pillows

•   Vinyl stickers or decals

•   Handpainted signs

•   Hair accessories

•   String art

•   Art prints

•   Tote bags

•   Wreaths

•   Holiday decorations

•   Bookmarks

•   Keychains

•   Dog bowls and other pet accessories

Once you zero in on your craft idea, think about how much time you’ll need to make each item and how much money you’ll need to spend on supplies. This can help you figure out how to price each item and how much profit you stand to make. Tip: Do some online research and see how other sellers are pricing and marketing their items.

Another important consideration is where you sell your goods. Luckily, there’s no shortage of options — here are some to consider:

•   Facebook Marketplace

•   Local Facebook bargain or community groups

•   Etsy

•   Amazon Handmade

•   aftcra.com

•   Craigslist

•   eBay

•   Your own website

•   Craft fairs

•   Local boutiques

If you’re selling your crafts online, remember to factor in shipping costs, taxes, and any fees the platform charges when setting your prices. Otherwise, you could end up shrinking your total profit.

Money-Making Website Ideas

You don’t need a website to earn extra cash from home, but having one could open up new money-making opportunities. To set up a website, you’ll need to find a hosting company and choose a domain. Your domain is your site name.

Once your site is set up, there are several ways you could use it to make money:

Selling products

A website is a great way to sell products you create, such as an e-book, digital printables, or an online course. If you’re selling handmade items, like crafts or clothing, you could set up a shop page on your site instead of using a third-party selling platform.

Selling services

If you don’t want to make a product, you could try selling a service instead. For example, you might use a website to offer services such as writing, photography, graphic design, tutoring, or online coaching.

Affiliate marketing

Affiliate marketing means recommending products and services sold by other people, then collecting a commission when the person you referred makes a purchase. For instance, if you have a pet blog, you could include an affiliate link to your favorite dog food brand. When someone clicks the link and buys the dog food, you make money.

Ads

Hosting ads on your website is another way to potentially earn extra cash from home. Every time someone visits your site and views an ad, you make money. The more traffic — or views — your website gets, the more you could earn.

Sponsored content

Sponsored content is an article, video, social media post, or other type of content that someone pays you to create and post. So again, say you have a pet blog. A dog food company might reach out and ask you to write a sponsored post reviewing their newest product. In turn, they pay you a flat fee for writing and publishing the post. You could also make money if your readers buy the product through your affiliate link.

If you’re interested in making money with a website, it helps to learn more about how to drive traffic. For example, it’s a good idea to know how search engine optimization (SEO) works and how to use it to drive people from Google or other search engines to your site. You may also want to consider how you can use social media to send additional traffic your way.

Money-Making Business Ideas

Thinking about becoming your own boss? If you prefer online business ideas, there are plenty of opportunities to consider, including:

•   Coaching or consulting

•   Interior design

•   Freelance writing or editing

•   Starting an e-commerce store

•   Virtual accounting

•   Transcription services

•   Teaching online through a platform like Outschool

Now, what could you do offline to make money from home? Some small business ideas you may pursue include starting a home baking business, offering childcare services in your home, or tutoring.

If you’re interested in starting a home business, it’s important to check into any legal requirements in your state first. For example, if you want to launch a baking business from home, you might be subject to local or state restrictions on home kitchens. The same applies if you want to care for children in your home. Once you reach a certain number of children, you may need to register with the state as a daycare center.

Side Hustle Money-Making Ideas

There are lots of low-stress ways to earn money. Will these opportunities make you rich? Not necessarily. But they could be a good way to earn some extra cash in your spare time without a lot of effort.

Here are some ideas to explore:

•   Taking online surveys

•   Joining an online focus group

•   Selling things you no longer need

•   Getting paid to watch videos, play games, or read emails

•   Customer service representative

•   Earning free gift cards or money with cashback apps

•   Becoming a mock juror online

•   Getting paid to test websites or apps

Home Jobs to Avoid

While there are lots of ideas for making extra money, some are better than others. Here are ones to avoid:

•   Illegal side hustles or jobs

•   Work-from-home job scams

•   At-home jobs that require a lot of work for little pay

•   Pyramid schemes or multi-level marketing (MLM) programs

There’s a simple rule of thumb to keep in mind when researching ways to earn extra cash: If something seems too good to be true, it probably is. Words and phrases like “guaranteed,” “make money while you sleep,” or “easy money” are often telltale indicators that an at-home job opportunity isn’t everything it seems. It’s also a good idea to be wary of any work-from-home job that requires you to pay fees or a deposit up front before getting started.

Tips for Making Money From Home

If you’re pursuing money-making ideas from home, it helps to know some of the do’s and don’ts so you can avoid job scams while maximizing your earning potential.

When exploring ways to make money from home, do:

•   Look for opportunities that fit your skill set or interests

•   Consider how much time you can put in to making money

•   Weigh any up front investment of time or money that might be required

•   Remember to keep track of work-related expenses using a spending app

•   Report the income you earn on your taxes if you’re required to do so

When looking at ways to make money from home, don’t:

•   Assume it’s easy to make money online

•   Give out personal or sensitive information to people you don’t know

•   Fall for work-from-home job scams

•   “Forget” to report the money you make on your taxes

•   Get frustrated and give up if you’re not making money right away

Also, don’t be afraid to try and try again if something isn’t working out. After all, there’s no single option for how to make extra income from home. You may start off doing one thing and find that another side hustle or job idea is a better fit. And you don’t have to limit yourself to just one thing either — having multiple side hustles can mean multiple streams of income.

The Takeaway

Whether you’re selling goods online, starting a business, or using your website to turn a profit, there’s no shortage of ways to make money from the comfort of home. In fact, you may discover there are multiple opportunities that fit your schedule and interests. As you’re researching your options, factor in how much time and money is required. It’s also a good idea to be wary of opportunities that sound too good to be true (they probably are). Once you start drawing an income, don’t forget to report it on your taxes, if you’re required to do so.

Need a simple way to get a handle on your income and work-related expenses? Using a money tracker app like SoFi makes it easy to see where you are financially at any given time. You can monitor your credit score, see what you’re spending, and view the progress you’re making toward your goals at no cost just for being a SoFi member.

Stay on top of your finances by seeing exactly how your money comes and goes.

FAQ

How can I make $100 a day from home?

Some of the best ways to make $100 a day from home include taking surveys for money, using cashback apps to shop, offering freelance services, and selling printables or handcrafted items online. You can also make $100 a day from home by flipping items you no longer need on sites like eBay, Facebook Marketplace, or Craigslist.

How can I make fun money?

If you just want to make some extra money to spend on “fun,” some of the easiest ways to do it include selling things you no longer need, doing odd jobs in your spare time, or getting paid to take surveys and play games through various mobile apps. You can also research weird ways to make money, like donating plasma or selling your hair.

How can I make money just sitting at home?

Some of the best ways to make money sitting at home are passive income ideas that require little to no work. For example, you may be able to make passive income by investing in stocks that pay dividends, setting up an affiliate marketing website to earn commissions when people shop at your affiliate partners, or opening a digital printable shop on sites like Etsy.


Photo credit: iStock/Amarr_RT

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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Can a Tax Preparer File Your Taxes Without Your Signature?

There’s no denying that filing taxes can be stressful, which is why many people turn to a tax preparer to help them navigate the process. This professional can offer extra reassurance that your taxes are filed properly and may even help you maximize your refund.

But can a tax preparer file your taxes without your signature? In short, yes, they can. Keep reading to learn more about signature requirements for tax filing.

What Is a Tax Preparer?

A tax preparer is a certified public accountant (CPA), attorney, enrolled agent, or other professional who is paid to prepare income tax returns for an individual or business. The tax preparer must have an IRS Preparer Tax Identification Number (PTIN) in order to prepare federal tax returns.

Tax preparers gain access to very personal information such as income and social security numbers, so this isn’t a relationship you’ll want to enter without careful consideration. Before you hire one, do your research. The IRS provides an online directory where you can find tax preparers who are near you or who have certain qualifications. You may also want to ask trusted friends and family members for referrals.

While many tax preparers can handle different types of taxes, it’s best to confirm that the tax preparer is experienced in the areas you need before hiring them. After all, a small business owner will likely have very different tax needs than an individual filing a W-2.

Recommended: Income Tax: What Is It and How Does It Work?

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What Qualifies as a Signed Tax Return?

Whether you’re preparing for tax season or are in the middle of filing your return, you probably already know how important it is to get your taxes done properly. The final step in the filing process that really can’t be skipped is signing the income tax return. If you file your taxes on your own, you need to sign the tax return. If a tax preparer helps you file your taxes, they need to sign the tax return and include their PTIN. If the return isn’t signed, the IRS won’t consider it valid.

Can a Tax Preparer File Your Taxes Without Your Signature?

Depending on their experience and area of expertise, a tax preparer may be able to offer guidance on different ways to save on taxes or help you make sense of complicated topics like income tax withholding. But these professionals can also offer a degree of convenience by signing a client’s tax return themselves and submitting it without their client’s signature. If you choose to work with a tax preparer, you’ll want to have their signature and PTIN on the tax return as proof that they prepared it.

How Do I Know if My Tax Preparer Filed My Taxes?

Tax preparers can provide peace of mind that your taxes are filed properly and hopefully help you maximize your tax refund and find potential tax breaks, like the earned income tax credit.

But if you’re wondering whether your tax preparer filed your taxes, there are ways to find out. The IRS Where’s My Refund tool , for instance, allows you to check the status of your return. You can also find out this information by calling the IRS directly. And be sure to check your inbox. If your return was filed, you should receive a confirmation and status updates by email, as long as you provided an email address.

Recommended: Guide to Filing Your Taxes for the First Time

Will the IRS Accept an Unsigned Tax Return?

What happens if you submit an income tax return — whether accidentally or on purpose — without any signature on it? The bad news is, the IRS does not accept unsigned income tax returns. The agency typically sends back the tax return with a notice asking you to sign and resubmit the return so it can be processed. If you fail to sign your tax return but file it on time, you likely will not be hit with a delinquency penalty, which can be good news for your budget.

Recommended: What Happens If I Miss the Tax Filing Deadline?

The Takeaway

A tax preparer can help you navigate the tax filing process and, hopefully, maximize your refund. These professionals can also sign your tax return and submit it without your signature, though you may choose to sign it as well. If you want to check the status of your return, you can use the IRS Where’s My Refund tool, call the agency directly, or check your inbox. The IRS typically emails a confirmation and status updates on your return, as long as you provided an email address when you filed.

Of course, hiring a tax preparer isn’t the only way to take control of your finances. SoFi’s money tracker app can also help you stay on track year-round. You can keep tabs on multiple account balances — and your credit scores — in one place. You can also set savings goals and review your spending, so there are no surprises come tax time.

Get the information and tools you need to make the most of your money.

FAQ

Can a tax preparer e-file your taxes without your signature?

Yes, a tax preparer can e-file a client’s taxes without their signature. The key here is that the tax preparer must sign the income tax return in order for it to be eligible for processing. The tax preparer’s certification number also has to be included on the tax return. If the tax preparer does not sign the income tax return, the taxpayer must sign it before it can be e-filed.

What should you do if a tax preparer files your taxes without your consent?

If you believe a tax preparer filed your taxes without your consent, you should report it to the IRS using Form 14157-A, Return Preparer Fraud or Misconduct Affidavit.

Will the IRS accept an unsigned tax return?

No, the IRS will not accept an unsigned income tax return as they don’t consider it valid. If someone tries to file an unsigned tax return, the IRS will send it back and request a signature. The taxpayer or their tax preparer must sign the income tax return for it to be valid.


SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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