It’s possible that you’ve previously dealt with a tax preparer, but did you ever inquire about their credentials?
While tax consultants have access to your most sensitive information, including your bank accounts, marriage, children — even your Social Security number – a large proportion of individuals do not understand this.
There are several additional issues to bear in mind while seeking for tax assistance, aside from screening a tax preparer. Here are seven suggestions on how to select the most qualified tax preparer or tax expert for your needs.
1. Obtain a Preparer Tax Identification Number from the IRS (PTIN)
A PTIN is required by the Internal Revenue Service for anybody who prepares or aids in the preparation of federal tax returns for remuneration. Take note of the word “for remuneration” Because tax preparers who work for free do not require PTINs. Be sure that your income tax preparer includes his or her PTIN number on your tax return – the IRS needs this as a condition of filing your return.
2. Require a certified public accountant, a law licence, or an enrolled agent certification.
To take it one step further, hire a professional preparer, such as a CPA, certified public accountant, licenced attorney, estate planning attorney, enrolled agent, or someone who has successfully completed the Internal Revenue Service’s Annual Filing Season programme, among other credentials. Programs such as the Accredited Business Accountant/Advisor and the Accredited Tax Preparer are examples of programmes that can assist preparers in meeting the Annual Filing Season Program requirement for their state. Study, tests, and continuing education are required for each of these qualifications in varied proportions.
How can you locate the most qualified tax preparer in your area who also has the certifications you require? One method is to look through the IRS’s directory. It includes preparers who have PTINs and professional certifications that have been recognised by the IRS. Volunteer preparers as well as preparers who just have PTINs will not be included in the database.
3. Seek out acquaintances who have positions of authority.
Membership in a professional organisation such as the National Association of Tax Professionals, the National Association of Enrolled Agents, the American Institute of Certified Public Accountants, or the American Academy of Attorney CPAs is always a good thing to have in a tax advisor because most of these organisations have codes of ethics, professional conduct requirements, and various certification programmes to assist their members. It is possible that your financial adviser’s business will be able to link you with a tax advisor with relative ease if you currently deal with them.
4. Compare tax advisor fees
What do tax preparers charge for their services? According to the National Society of Accountants, the average charge for producing a non-itemized Form 1040 in 2020 will be $220. When filing an itemised form 1040, the charge increases to $323. Typically, tax preparers charge either a predetermined price for each form and schedule that must be included in your return, or they charge a minimum fee plus additional costs dependent on the complexity of your return. This is a warning sign: if you come across a tax preparer who bases his or her charge on the size of your refund or who claims they can obtain you a larger refund than the next person, run.
5. Take into consideration tax consultants who do not use e-filing.
The Internal Revenue Service requires that any paid preparer who completes more than 10 returns for customers file their returns electronically using the IRS’s e-file system. If your tax preparer does not provide electronic filing, it may be a hint that the individual is not performing as much tax preparation as you believe.
6. Confirm that they are willing to sign on the dotted line.
Paid preparers are required to sign their customers’ tax returns and supply their PTINs, according to the law. Never sign a blank tax return since the preparer might fill in the blanks with anything they wanted, even their own bank account number, in order to syphon off your refund.
7. Determine whether or not your counsel would have your back.
Enrolled agents, certified public accountants, and attorneys with PTINs can represent you in front of the Internal Revenue Service (IRS) in matters like as audits, payments and collection concerns, and appeals. Preparers who just have PTINs are unable to do so — even if they were the ones who prepared your return. Preparers who have completed the Annual Filing Season Program are only permitted to represent clients in certain circumstances.
It is also critical to have access to resources. Even after tax season has ended and your tax return has been filed, the top tax preparers will answer the phone, react to your email, or arrange for you to come in for a consultation with them.
If visiting with an adviser in person isn’t absolutely necessary, you might want to try seeking assistance online. Many online tax preparers now provide live support, so if you have a question while you’re doing your tax return, you may receive immediate advice.
Is it worthwhile to use the services of a tax preparer?
If you have a straightforward tax return, you may not require much more than a free tax filing service to complete it. Paying for cheap tax preparation packages from tax providers, rather than visiting a tax expert in person, can be an affordable option for persons with more difficult tax situations to get their taxes done. However, if you own a small business, are dealing with a difficult tax year, or just want to speak with someone in person, consulting with a professional may be worthwhile.