Albert Einstein once said “The hardest thing in the world to understand is the income tax”. Most Americans probably agree since 60% of them use paid preparers (per the IRS).
Here are 5 tips for choosing a good tax preparer:
1) Check For Qualifications
Anyone who completes a tax return for compensation must have a Preparer Tax Identification Number, or PTIN. Avoid tax preparers without a PTIN.
Credentials are ideal. Many taxpayers are unaware of the Enrolled Agent (EA). EA’s must pass a rigorous exam given by IRS and meet continuing education requirements. CPA’s and Attorney’s also have state licensing and continuing education requirements.
Other accountants, bookkeepers and tax preparers may be able to demonstrate competence without formal credentials. On the job experience would be important.
2) Look At Tax Background
No one size fits all. Make sure the tax preparer can fill your needs. Some tax preparers can handle simple returns very efficiently. Others may be well versed in business issues (Schedule C or SubChapter S corporations, for example; Or focus on pass-through entities (partnerships, trusts, etc.) or tax exempt organizations; Still others may be fluent in investment issues or a particular industry. It is not uncommon for tax preparers to have a wide scope of knowledge—especially those who have been around.
Having an alphabet soup of credentials does not mean that person should be preparing returns. Make sure that person has experience in preparing taxes.
3) Investigate Reputation
Find out if the preparer has a good record with watchdog groups; Look for disciplinary actions and license status through state boards for CPA’s or attorneys or the IRS Office of Enrollment for Enrolled Agents.A preparer who can produce references or web site testimonials is generally a good sign of integrity.
4) Consider Year Round Access
Make sure the tax preparer will be available after the return is filed and doesn’t disappear after April 15. You may get a request for more information from either IRS or the state and need help from the preparer. You may have circumstances that require tax planning (calculating estimated tax payments, or college or retirement planning, as examples) any time of the year and the preparer needs to be available. Stay away from preparers who do not keep regular business hours throughout the year.
5) Inquire About Audit Services
Nobody wants to think about getting audited but it does happen. Can the tax preparer represent you in front of IRS? Not all tax preparers can
Choosing a good tax preparer requires some effort on your part but is worthwhile. You are not just looking for someone to fill out numbers on a form but to create a working relationship for an important part of your financial life.
By: John J Kasperek. John is an Enrolled Agent, has a wide of knowledge (including audits) after running his own year round practice for 27 years, with a good record with watchdog groups. He enjoys giving useful tips so people can prosper.