Choosing a tax preparerAsk these 5 questions to ensure that you’re making the best decision for your own situation.

Many of you reading this already understand the importance of choosing the right tax preparer. Feel free to forward this article to others who may need some practical advice.

Understand both the short- and long-term costs of accurate tax preparation

Where software or a strip mall storefront may work for a simple tax return, your investments, mortgages, businesses ownership, and alternative minimum tax calculations can quickly make things very complicated. Just like you’d hire a surgeon to conduct your triple bypass, consider hiring an expert, or at least a trained professional, to handle more complex tax return preparation. If you think I’m exaggerating, imagine if surgeons had to follow a 75,000-page set of rules similar to the US tax code!

Unfortunately, I’m contacted each year by people who realized, either on their own or through feedback from the IRS, that their returns were not prepared correctly. Most issues could have been avoided, and I can normally file amendments to correct problems, but I hate to see people waste money to fix something that shouldn’t have occurred in the first place. What’s worse, others may be losing hundreds or thousands of dollars in deductions and not even be aware of it. Think about that before you buy tax software and attempt to do your own taxes.

Here are 5 questions that you should ask potential tax preparers to ensure that you’re making the best overall decision:

  1. What training have you received? Believe it or not, the IRS doesn’t require training for someone to prepare your taxes. CPAs undergo years of training along and have annual continuing education requirements. Enrolled agents (EAs) are tax preparers who pass an IRS test. Some national chains put their seasonal staff through a quick training process, while others don’t provide any. Do you want a novice to handle even a simple tax return?
  2. What is your PTIN? The IRS requires anyone who prepares or assists in the preparation of federal tax returns to have a preparer tax identification number, or PTIN. Trained preparers should know this number as well as their social security number, and you can verify their credentials on the IRS Directory of Federal Tax Return Preparers If the preparer is not listed, find another preparer.
  3. How much will this cost? The tax preparer should be able to give you a realistic price quote once you’ve described your financial situation. Run away from anyone who refuses to provide a written quote, or any service where preparation fees are based on the size of your refund.
  4. Who can I contact after tax season? Many national chains and other strip mall outlets pack up their bags, costumes, and foam fingers, and close down after the April 15 filing deadline. If you have a question or issue, you need to know who to call. You can decide whether a customer service center is adequate for your needs.
  5. What happens if I get audited? There’s always a chance that the IRS (or state treasury) will contact you with a question about your return or a request for examination. Unfortunately, it may be months or even years after you’ve filed. CPAs and enrolled agents are normally able to represent you in these situations. Choose someone that will stand behind their work now and in the future, rather than having to write a separate check later for IRS support.
  6. Is your name Neal Bach? Just kidding…

You’re legally responsible for your taxes – and any mistakes

When you sign your return, you take responsibility for the contents. Choose your preparer wisely, then review your completed return (including your address for refunds) before signing anything. Make sure your preparer signs and includes his or her PTIN – required by law. Finally, get a copy of your completed return for your records. If you have any questions or would like someone to double-check your tax return, please contact us. We would be happy to help.

Neal Bach, CPA