If you don't want to file your own taxes, or feel that you need professional help, then you may be considering hiring a paid tax preparer such as a CPA, enrolled agent, tax attorney, or a preparation company. Choosing the right service is important and taxpayers should take time to investigate their options. The IRS has some useful tips on choosing a tax preparer. Why is this such a key decision?
IRS Tips on Choosing Tax Preparers
It's worth keeping IRS advice in mind when short-listing preparers. Recommended areas to consider include:
- Qualifications: Make sure that the individual or service you use is certified to do the work you need. Good preparers will have a professional affiliation to organizations with a specific code of ethics and a commitment to continuing education after qualification.
- Track record: Use organizations such as the Better Business Bureau, state boards of accountancy (CPAs), state bar associations (tax attorneys), and the IRS Office of Professional Responsibility (enrolled agents) to see if an individual or service has been reported or had problems in the past.
- Fees: Don't assume that the cheapest fee is best. The IRS recommends avoiding services/paid preparers who charge fees based on a refund percentage or those who claim that they will be able to get bigger refunds.
- Accessibility: Make sure that your tax preparer will be available to you after your return has been filed as you may need their services again if there is a problem.
- Information: Look for individuals who ask questions about your income and who ask for documentation (i.e. receipts and records). They will need this information to prepare your return correctly.
- Signing returns: Never hire a preparer who asks you to sign a blank tax return or to sign in pencil. If you are unsure about anything, ask questions before you sign.
- PTINs: Make sure that the preparer signs the return and includes their PTIN number. Any paid preparer needs to apply for a new Preparer Tax Idenitification Number this year, even if they have one already, so check that this has been done.
Other Tips on Shortlisting Tax Preparation Services
The points raised by the IRS are useful, but you may also want to consider other ways to shortlist paid preparers. You can, for example, ask friends or family members for referrals and can also do your own quick online search to see if anyone has posted problems with a particular individual or service on websites and forums.
You can get a good feel for the kind of service you'll be given by calling selected providers and discussing their services and charges. Make sure you know who will take responsibility for your return – you may talk to an experienced person initially, but they may then delegate your return to junior staff. If your return is more complex than the norm, or you will be using less common forms to file, then check to see that they have relevant experience.
Why is it Important to Choose the Best Tax Preparer?
Choosing a paid tax preparer or professional preparation service doesn't take away your legal responsibility with the IRS. It is still down to you to make sure that your return is accurate, even if you pay to have it prepared by a professional, and you could be held liable for any mistakes or false information.
Keep in mind that you could consider filing your own return with the IRS Free File system. In some cases (depending on income), you may also be given access to free software that guides you through the preparation process. If you simply need to file a 1040EZ, you could file via iPhone or Android phone with SnapTax. Older taxpayers may also be eligible for free filing assistance through the AARP's Tax-Aide service.
Source: IRS Tax Tip 2011-06, January 10, 2011 (Points to Keep in Mind When Choosing a Tax Preparer)
Carol Finch - Carol Finch is the Topic Editor for Retirement Planning, Budgeting, E-Commerce & Technical/Business Writing on Suite101.
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