If you’re someone who doesn’t have the time or sufficient knowledge of the tax code to prepare your own tax returns, you might be wondering how to find a quality professional to do your taxes. After all, just because someone will accept money in exchange for preparing a tax return doesn’t make them good at what they do. While there is no 100% foolproof method to avoid getting taken advantage of, these tips will help.
There are many different types of professionals who prepare tax returns: certified public accountants, enrolled agents, accredited tax advisers, accredited tax preparers, and employees of national retail tax preparation companies. No matter who you are considering to prepare your tax returns, it’s a good idea to ask for referrals from friends and family you trust and to interview and research anyone you’re considering hiring. Ask how long they’ve been in business, what their credentials are, and if they have any specialties. Before handing over your sensitive personal information, also make sure you know exactly who will be preparing your return. Then check that individual’s credentials with the appropriate board or professional organization.
Ask about tax preparation fees ahead of time and how much you can expect to pay, and get the quote in writing. Will you be charged a flat fee or an hourly rate, and what is the estimated total cost? Don’t hire anyone who charges a fee based on the size of your return. The IRS doesn’t allow this, and it gives the preparer an incentive to create an inaccurate return.
Be aware that you are still liable for your tax return even if it is professionally prepared. Review your return for accuracy before it’s submitted, and ask your tax preparer questions about anything you don’t understand. Also, make sure to get a copy of your return for your records.
Make sure your preparer signs your return in the paid preparer section (the IRS requires it). You can also authorize a paid preparer to speak to the IRS on your behalf if there are any questions about your tax return simply by making this choice near the signature line of your tax return.
Give your tax preparer all the records related to your tax return. For example, if you own a small business, your tax preparer can look at the receipts for your business expenses to get a better idea of whether all the deductions you want to claim are allowed by the IRS. No professional can prepare an accurate return for you if they don’t have complete and detailed information. Furthermore, if you are audited, the IRS will want to see these records.
Find out what kind of representation the preparer can offer you in case of an audit. The IRS says that “only attorneys, CPAs and enrolled agents can represent taxpayers before the IRS in all matters including audits, collection actions and appeals. Other return preparers may represent taxpayers only in audits regarding a return that they signed as a preparer.”
If you’ve never tried preparing your return yourself, you might be surprised by how simple it can be with the help of tax software. Programs like Turbo Tax ask you questions about your situation to make sure you enter all your sources of income and get all the deductions and credits you’re entitled to. Most tax programs have free versions for preparing your federal return, so the only risk you take by trying to prepare your return yourself is the time you spend.
If you’re not confident in the finished product, you can take the return you’ve prepared, along with its supporting documentation (W2s, 1099s, etc.) to a professional to have it checked for accuracy. Since you’ve already done the work, this strategy may save you money. And if you learn that you’ve prepared your return correctly, you might gain the confidence to prepare your own returns in future years.