Yesou may have worked with a tax preparer in the past, but have you ever inquired about their credentials? Most people don’t, despite the fact that tax advisers have access to information about your most personal information, such as bank accounts, marriage, children, and social security number.
Besides checking with a tax preparer, there are a few other things to consider when seeking tax assistance. Here are seven tips to help you choose the best tax preparer or advisor for you.
Check the preparer tax identification number (PTIN)
Anyone who prepares or assists in the preparation of federal tax returns for compensation is required by the IRS to have a PTIN. Volunteer tax preparers do not need PTINs. Make sure your tax preparer includes their PTIN number on your return; the IRS also requires it.
Look for a CPA, law degree or registered agent designation
A PTIN is relatively easy to obtain, so go the extra mile and hire an Accredited Preparer, i.e. someone who is also a CPA, CPA, Licensed Attorney, EA, Enrolled Agent, or has completed the IRS annual filing season program. Accredited Business Accountant/Advisor and Accredited Tax Preparer are two programs that can help preparers meet the annual filing season program requirement. All of these degrees require varying amounts of study, examinations, and continuing education.
One method to find a tax preparer is to browse the IRS directory. Preparers with PTINs and IRS-recognized professional credentials are included. Volunteer preparers and preparers with only PTINs will not be included in the database.
Consult professional organizations
A tax advisor’s membership in a professional organization such as the National Association of Tax Professionals, National Association of Enrolled Agents, American Institute of Certified Public Accountants, or American Academy of Attorney CPAs is always a plus, as most have codes of ethics, professional conduct requirements, and various certification programs. If you already have a financial advisor, they may be able to put you in touch with a tax specialist.
Compare the fees of tax advisors
According to the National Society of Accountants, the average fee for preparing a non-detailed 1040 form in 2020 was $220. The fee for a long form 1040 has increased to $323. Tax preparers frequently charge a flat fee for each form and schedule required in your return, or a minimum fee plus costs depending on the complexity of your return. It’s a red flag if a tax preparer bases their fee on the amount of your refund or claims they can get you a bigger refund than the next person.
Consider hiring a tax advisor who forwards
Any paid preparer who prepares more than 10 returns for clients must use the IRS electronic file system to submit their returns. If your tax preparer doesn’t offer e-filing, it could mean they’re not doing as much work as you think.
Confirm that your preparer signs your return
Paid preparers must sign their clients’ declarations and provide their PTINs, as required by law. Never sign a blank tax return because the preparer could scribble anything they want on it, including their own bank account number, to steal your refund.
Make sure you can trust your tax advisor
For audits, payment and collection issues, and appeals, enrolled agents, CPAs, and attorneys with PTINs can represent you before the IRS. Even if they prepared your return, preparers who only have PTINs cannot do so. Only in limited circumstances can preparers who have completed the annual filing season program represent clients.
It is also important to be available. The best tax preparers will take your call, respond to your email, or welcome you for a visit even after the filing season is over and your tax return is due.
If it’s not necessary to meet with an advisor in person, you can seek help online. Many online tax preparers now provide live support, so you can get help right away if you have a question while filing.
For more tips on how to choose your tax advisor and/or preparer, see the IRS website.
