About 50 percent of taxpayers hire a tax professional to prepare their tax returns. There are many great ones to choose but also some red flags to avoid. Let's go over how to choose a tax preparer.
Tax preparers can assume a variety of job titles, such as CPA, attorney or enrolled agent. No matter the title, be sure they have a valid IRS Preparer Tax Identification Number (PTIN). The PTIN shows the IRS has authorized this person to prepare and file federal tax returns. This also shows this person can make refund claims.
Education, skills and experience will determine the quality and accuracy of your return. Ask the tax preparer about his or her professional credentials. Inquire about their participation in professional organizations. Also, ask about any continuing education undertaken to stay up-to-date with tax laws. You can also consult the Better Business Bureau or State Board of Accountancy to verify the track record.
A good tax preparer relies on proven facts and figures rather than guesswork. For example, a tax preparer should request your income and expense records and receipts before preparing and filing your tax return. If a preparer offers to file based on a prior pay stub, that's a bad sign. You need a legitimate W-2 or other tax record or it can result in inaccurate returns.
When learning how to choose a tax preparer for the first time, it is important to gauge their tax preparation service fees alongside their professional merits. Ask the tax preparer up-front about estimated fees and how he expects to receive them. The IRS recommends steering clear of tax preparers who calculate your service fee based on a percentage of your refund. This fallacy can lead an unethical tax preparer to boast a larger refund than their competitors or even inflate the figure of your refund when filing.
A tax preparer should work on your behalf. This means getting your acceptance on the final return before it is filed. Avoid tax preparers who ask you to sign a blank tax form or prevent you from reviewing the prepared return. By the same token, steer clear of tax preparers who are poor communicators or are frequently missing in action. Hire a tax preparer who will remain available to you during and after tax season. You want them to address any post-filing questions or concerns you may have.