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Tax Preparation: 6 Tips for finding a Tax Preparer

Taxes are a complicated matter for about 53.5% of taxpayers who wisely decide it is best to leave them in the knowledgeable hands of tax preparers for accurate calculations. Filing your tax returns is no easy mission, even if you are very organized with regards to your financial statements and receipts and your W-2s and 1099s are all set. While some of us are lucky enough to have a family member or friend all-knowing in matters of taxes, tax preparation, and federal tax returns and willing to lend a helping hand, most of us have to do our taxes on our own or pay for a tax preparation service.

Talking with a stranger about your finances and family doesn’t seem like a good idea unless you are sure this person is a qualified and reputable tax preparer registered with the IRS and has a Preparer Tax Identification Number (PTIN) – a number issued by IRS to eligible preparers. Tax preparers can be attorneys, certified public accountants (CPAs), enrolled agents, annual filing season program participants, among others with a PTIN. Clearly, you have plenty of options to choose from, but how do you make sure you choose someone who is qualified, certified, honest, and reliable? Check out these tips to make an informed decision:

1. Verify the tax preparer’s PTIN

It all starts with the preparer’s tax identification number. Before sending out important documents and asking a tax preparer to help prepare your federal returns and taxes, you need to make sure the person claiming to be a tax preparer has a PTIN. This only applies if the preparer asks for compensation for their service. If they volunteer to do your tax returns, they don’t need a PTIN. The tax preparer has to include their PTIN on your paper forms to comply with the IRS requirements.


2. Check the tax preparer’s credentials

The next step is to verify if the tax preparer has completed certain programs and has the appropriate education that allows them to provide the tax preparation service. If you have decided to work with a professional tax practitioner, you will need to see proof of a business license received from the state department of commerce. Other tax practitioners include an enrolled agent who is licensed by the IRS and other tax practitioners who offer tax preparation services complete the IRS’s Annual Filing Season program and other continuing education programs.

3. Take a look at the tax preparer’s professional record

An impeccable reputation and many years of experience are clear indicators that you are going to entrust sensitive matters like your finances and confidential information in trustworthy hands. Credentials are not enough for the tax preparer to earn your trust. They need to prove they have a good reputation that attests to their work ethic and professionalism. Take a look at their reviews before handing them your financial documents. Make sure that they have security measures in place for accessing your confidential information. Any tax practitioner who has an active PTIN is regulated by the IRS and has to adhere to a code of ethics.


4. Discuss the fees and compare the price offers

Since you will be paying for the tax preparer’s service, it is only natural to discuss their prices before asking for help with filing taxes and calculations of your current tax return. Costs vary depending on numerous factors, including the preparer’s experiences, the details of service provided, the complexity of your tax situation, and your location. Ask for quotes from several tax preparers, so you can compare them, and choose to work with a tax preparer who has a transparent method of determining their price. If they are not able to provide a clear estimate from the very beginning, at least ask them to explain how they are going to determine the price. It can be a set fee for each form, an hourly rate, or a minimum fee and additional costs, depending on every requirement. Ask if the fee includes e-filing, office visits, representation, or audit protection if the IRS flags your return. Send your tax documents and social security number only if you are going to work with the respective tax preparer and not when you are inquiring about their services.

5. Choose the best person for the job

You should choose your tax preparer based on your current tax situation. For example, if you are dealing with a complex tax situation or complicated returns, it is best to go with someone who has extensive experience with tax preparation and tax laws. Most tax practitioners are able to represent clients in their relationship with the IRS, perform audits, and conduct appeals. If you are dealing with complicated tax situations that may lead to litigation and tax court or you need the highest level of confidentiality, an attorney is undoubtedly your best choice.


6. Keep an eye for red flags

If the IRS suspects the tax preparer is unethical, they may very well decide to give you special attention, and, trust us, this is not the type of attention you want. Try to stay away from tax preparers who demand a percentage of your tax refund as a fee. This violates the code of ethics and they will almost certainly try to find ways to inflate the fee and compromise the legitimacy of your tax returns. Refuse to work with a tax preparer who offers cash refunds checks or decides they can prepare your returns without asking for any documentation. Don’t work with a tax preparer who asks you to sign a blank tax return and always review your tax returns before sending them to the IRS. Check to see if the return includes the preparer’s PTIN at the end of your 1040 form. If you are expected to receive a refund, verify the bank routing number and account number mentioned on Line 35 of the 1040 or 1040-SR. The refund should be deposited into your bank account and not your tax preparer’s account. Don’t trust preparers who guarantee refunds regardless of your tax situation and work only with professional preparers who file returns electronically.