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Seven Tips for Choosing a Tax Preparer
As tax laws become increasingly complicated, more taxpayers rely on tax
professionals and tax software to help prepare their returns. In her most recent report to Congress, the National Tax Advocate, Nina Olson, citing tax complexity, as one of the most serious problems
facing taxpayers, noting that about 60% of taxpayers pay someone to prepare their returns.
If you're one of the estimated 84 million taxpayers who will opt to use a paid tax preparer this tax season, you should choose carefully. You're legally responsible for what goes on your tax return, even if the return is prepared by someone else. You want to select someone who is knowledgeable, honest and professional. How do you find a preparer that measures up? Following are seven tips for choosing a tax preparer:
Use the Web Wisely
Google the names of tax preparers in your area. But don't stop there. Click on the tax preparer's website and find out more about the tax preparer's qualifications. Don't be blinded by a fancy website -- you're looking for substance, not flash. Check to see whether the preparer has stayed up to date with the latest tax news; writing a tax blog or newsletter, being interviewed by the media for tax news stories and teaching or speaking engagements are good indications that the preparer is on top of the latest issues.
Do Some Due Diligence
It's exactly what it sounds like. Check with professional organizations and licensing agencies to determine whether any complaints have been lodged against the preparer. A complaint isn't necessarily indicative of any wrongdoing, but you should regard a preparer with a number of complaints with some measure of caution.
Make Sure the Preparer is Eligible to File Your Returns
New IRS regulations require all paid tax return preparers (that includes attorneys and CPAs) to have what's called a PTIN, or Preparer Tax Identification Number, in order to prepare federal income tax returns as of Jan. 1, 2011. Additionally, some states, like Oregon and California, require special licensing in order to prepare returns. Make sure your tax preparer is compliant with any state regulations. Don't be shy; ask up front.
A basic federal tax return can cost between $200 and $500 to prepare, but that amount can vary drastically depending on the complexity of your return as well as where you live (metropolitan areas tend to be more expensive, for example, due to increased overhead). Don't assume that cheaper is always best or that a more expensive preparer is necessarily better. If a preparer's fees are significantly different from others in the area, ask why. Additional services included (or excluded) may affect the pricing. Be wary of tax professionals who base pricing on any anticipated refund; the IRS has found that this kind of financial incentive can result in cutting corners or tax fraud.
Trust Your Intuition
A professional tax preparer will return your phone calls and answer your questions (though remember that most are very busy at tax time, so be patient). A responsible preparer will also advise you which tax and financial documents to bring to your appointment. Remember that you should feel comfortable asking questions, not intimidated. If you're not getting good service, don't stick around. And never sign a blank tax form -- a reputable preparer wouldn't ask you to sign your return before it's been completed.
Make Sure Your Tax Preparer Will Be Available
Tax preparers who hang out a sign in March and April and then disappear for the rest of the year tend not to be a good choice. If there's a problem with your return, you'll want to be able to reach your tax preparer to ask questions. Look for a preparer with an established business and not a "fly by night" service. Make sure you find out upfront when the preparer's office is open and how you can make contact with the preparer in the off-season.
Finally, Ask Around for Referrals
We rely on the advice of our friends and family for everything from buying a new car to finding a pediatrician. Why not do the same for your tax preparer? Ask around for a few names from folks you trust and follow up with questions about what the preparer does (and doesn't do) well. But as with anything else, do your homework (see numbers 1-6 above). Just like your friend's cute new haircut, what works for one person doesn't always work for another
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