Right about now you’re probably trying to decide if you want to continue to complete your taxes on your own or if now is the time to finally hire a professional to do so. Completing taxes on your own can be an intimidating experience – one that can be frustrating and eats up more hours that you have to devote to it.
Luckily, if you choose to have someone prepare your tax return, their expertise can help ensure that you get all the deductions and credits you are eligible to receive without the headache. That’s why choosing a tax preparer is an important financial decision that should not be taken lightly.
Although a paid tax return preparer is primarily responsible for the accuracy of your return, you’re ultimately responsible for the accuracy of every item reported on it.
See the tips below on how to not just chose a good but a GREAT Tax Preparer.
1. Check the Preparer’s Qualifications. Only attorneys, CPAs, and Enrolled Agents can represent taxpayers before the IRS in all matters, including audits, collections, and appeals. Other tax return preparers who participate in the IRS Annual Filing Season Program have limited practice rights to represent taxpayers for audits of returns they prepared and signed.
a. Use the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications. This tool helps taxpayers find a tax return preparer with specific qualifications. The directory is a searchable and sortable listing of preparers.
2. Check the Preparer’s History. Ask the Better Business Bureau about the preparer. Check for disciplinary actions and the license status for credentialed preparers. For CPAs, check with the State Board of Accountancy. For attorneys, check with the State Bar Association. For Enrolled Agents, go to the verify enrolled agent status page on IRS.gov or check the directory.
3. Make Sure the Preparer is Available beyond April 15th. The best tax preparers are available after tax season because they understand that effective tax planning is all year long! Choose a tax return preparer you’ll be able to contact in case the IRS examines your return and has questions regarding how your return was prepared. You can designate your paid tax return preparer or another third party to speak to the IRS concerning the preparation of your return, payment/refund issues, and mathematical errors. Avoid fly-by-night preparers.
4. Ask about Service Fees. Avoid preparers who base fees on a percentage of the refund or who boast bigger refunds than their competition.
5. Avoid Preparers Who Only Care About A Massive Refund. A quality preparer isn’t just focused on this years tax return but on the tax returns to come. Effective tax saving requires a multi year view. Do they ask questions such as, “Do you expect to have a child in the next year, any upcoming medical procedures, divorce, child going to college?” If not, maybe they aren’t the one for you. A real tax preparer advises based on current and future need, even if that means a smaller refund this year to allow for a better one next year.
6. Make Sure They can E-File. Taxpayers should make sure their preparer offers IRS e-file. The quickest way for taxpayers to get their refund is to electronically file their federal tax return and use direct deposit.
7. Avoid Preparers Who Do Not Ask Questions Or For Supporting Documents. Good preparers will ask to see a taxpayer’s records and receipts. They’ll ask questions to figure things like the total income, tax deductions and credits and will mention any irregularities. Make sure you keep these documents for at least 3 years.
8. Ensure the Preparer Signs, Includes Their PTIN. All paid tax preparers must have a Preparer Tax Identification Number. By law, paid preparers must sign returns, include their PTIN and provides you with a copy of the filed return.
9. Never Sign a Blank Return. Don’t use a tax preparer who asks a taxpayer to sign a blank tax form or offers to pay your tax bill for you without documentation.
10. Review Before Signing. Before signing a tax return, review it. Ask questions if something is not clear. Taxpayers should feel comfortable with the accuracy of their return before they sign it. They should also make sure that their refund goes directly to them – not to the preparer’s bank account. Review the routing and bank account number on the completed return.