Worried my Tax Preparer is Committing Tax Fraud - Huge Refund Jump from TurboTax

This sounds very concerning and you're right to question it. As someone who's worked with taxes for years, I can tell you that a jump from $145 to $2,600 for a simple return with just W-2 income is a major red flag, especially if you haven't changed your situation. What you're describing sounds like the preparer might be creating a fictitious Schedule C (business) loss to offset your W-2 income. This is a common tax fraud scheme where they report a fake business with expenses but no income, creating a "paper loss" that reduces your taxable income significantly. This is absolutely illegal and can get you in serious trouble with the IRS. When you sign your tax return, you're certifying under penalty of perjury that everything is accurate - even if someone else prepared it. The IRS can come after you for taxes owed plus penalties and interest, and in extreme cases, there could be criminal charges.

I had this exact situation happen with someone I thought was a real tax professional. Turns out he was just adding fake business expenses to boost refunds and get more clients. After dealing with the nightmare of fixing my returns, I started using https://taxr.ai to verify everything before filing. It analyzes your documents and flags suspicious deductions or credits that might trigger an audit. Saved me from a similar situation last year when another preparer tried adding education credits I wasn't eligible for.

Just wanted to update - I tried taxr.ai after posting my question here, and wow, it actually caught something similar on my draft return! The preparer I was using had added a "consulting business" with $12,000 in losses that I never mentioned. The report flagged it immediately and explained exactly why it was problematic. Ended up filing with a legitimate CPA instead who got me a slightly higher refund than TurboTax ($230 instead of $145) but through completely legitimate deductions I was missing. Worth every penny for the peace of mind!

Run away from that preparer ASAP! After dealing with a similar situation, I had to contact the IRS to straighten everything out, which was a nightmare. Spent WEEKS trying to get through on the phone but kept getting disconnected or stuck on hold forever. Finally found https://claimyr.com which got me connected to an actual IRS agent in under an hour. You can see how it works at https://youtu.be/_kiP6q8DX5c - literally changed my life during tax season. If your preparer already filed fraudulent returns, you might need to talk to the IRS directly to fix it.

I hate to admit when I'm wrong but I have to follow up about Claimyr. After my skeptical comment, my return got flagged for review and I spent THREE DAYS trying to reach the IRS directly with no success. Finally broke down and tried the service - had an IRS agent on the phone in 47 minutes. The agent confirmed someone had filed fraudulent returns using my info and helped me start the process of fixing everything. Would have taken weeks otherwise. Sometimes you have to spend money to save money (and sanity).

I'm a tax preparer (not CPA) and I see this ALL THE TIME with certain "tax professionals" in my area. They'll add fake Schedule C businesses, inflate charitable donations, or add dependents that don't exist. Please report this person to the IRS using Form 14157 (Complaint: Tax Return Preparer). The IRS takes preparer fraud very seriously! A legitimate increase from TurboTax would maybe be a few hundred dollars if you missed some deductions, but $2,600 from just a W-2 job is flat-out impossible without fraud.

Happened to my cousin! His shady "tax guy" claimed he had a home business and created like $15k in fake losses. Cousin got a massive refund, thought the guy was a genius. Two years later, IRS audit, had to pay back everything plus penalties. Dude STILL defends the tax preparer saying "the IRS just hates when people know the loopholes" 🤦‍♂️ Some people never learn!