Your tax preparer is one of the most important people on your business team and can help maximize your deductions and make sure your business is complying with all applicable tax laws.
Tax preparers may have a wide variety of certifications, charge vastly different fee schedules and have very different levels of expertise. So how do you find the best tax preparer nearby who understands the nuances of your tax circumstances and can fully assist you?
Here are a few things to consider when looking for a tax preparer so that you can find the best one for your needs.
Table of Contents
- Check Prepared Tax Identification Number (PTIN) of Tax Preparer
- Verify Tax Preparer Credentials
- Get Fee Quotes from Tax Preparers
- Tax Preparer Red Flags
- Tax Preparer Memberships of Professional Organizations
- Prevent Unethical Tax Preparers Stealing Your Refund
- Prepare For A Tax Audit
- Does Your Tax Preparer Disclose Additional Charges?
- What Type of Document Security Does Your Tax Preparer Use?
- What Is Your Tax Preparer’s Response Time?
Check Prepared Tax Identification Number (PTIN) of Tax Preparer
Request a PTIN for any tax preparer you provide with private, personal documents
The first step is to determine whether the tax preparer will be compensated. If a good friend, spouse, partner or finance whiz you know well is helping you prepare your taxes at no cost, they won’t need a Prepared Tax Identification Number (PTIN).
However, any tax preparer who is compensated is required by the IRS to have a PTIN. The IRS also requires your tax preparer to jot down their PTIN on your tax return. Double check before signing off on your tax filing that the tax preparer’s PTIN is listed.
Verify Tax Preparer Credentials
To find the best tax preparer nearby, verify the tax preparer has a CPA, enrolled agent certification or has a law license in addition to their PTIN.
A tax preparer with a PTIN is not necessarily a stamp of expertise. Although necessary, you should go a step further and verify the credentials of your tax preparer, which means they should fall into one of the following three categories:
- Enrolled agent
- Certified Public Accountant (CPA)
- Law license holder
The IRS tax code is extraordinarily long and complex. You will want your tax preparer to be credentialed by a program that requires ongoing learning. Each year the tax code changes, and new rules are constantly added, which necessitates your tax preparer stay knowledgeable on current rules and tax code changes.
The IRS has an Annual Filing Season program which tax preparers can complete via the Accredited Business Accountant and Accredited Tax Preparer programs.
To find a credentialed tax preparer nearby, the IRS provides a directory here of tax preparers who have PTINs.
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Get Fee Quotes from Tax Preparers
Tax preparers’ fee schedules vary widely by expertise level, credentials, experience and geography. Compare fee quotes of at least 3 tax preparers before hiring.
Fee schedules vary widely among tax preparers. Finding a qualified, experienced tax preparer should not cost you an arm and a leg.
The average tax return preparation fee is approximately $300 according to the National Society of Accountants; this is for Form 1040 with Schedule A and a state tax filing return.
The average cost to prepare a tax return drops by almost 50% when filing without deductions. These amounts will vary by geography with tax preparers in big cities charging more.
According to the National Society of Accountants, tax preparers charge approximately $160 per hour for assisting tax filers with IRS auditing inspections.
Tax Preparer Red Flags
Tax preparers have a standard method of charging fees. Beware of unusual fee schedules or methods of charging.
Tax preparers typically charge one of the following ways:
- Hourly charge
- Fee per form
- Flat rate for filing tax forms and any tax questions throughout the year
Red flags should go up in your mind if a tax preparer quotes you a fee schedule by any of the following methods:
- Size of refund
- More deductions than other tax preparers
Another warning sign is if your tax preparer does not offer a tax e-file service.
The IRS mandates that tax preparers filing more than ten returns file electronically so failing to offer this service may be a sign that the tax preparer has a very small client base, which isn’t necessarily negative but does warrant further research.
A tax preparer with integrity will be transparent in all respects. If your tax preparer is not willing to sign their name to the tax return, investigate why as a matter of priority because the law requires tax preparers to execute tax return contracts with their own signatory.
Tax Preparer Memberships of Professional Organizations
Ethics among tax preparers is very important because tax preparers have access to your personal information such as social security number, date of birth, credit card details and so forth.
Professional organizations, such as the ones listed below, institute professional codes of conduct that will instill greater confidence in you that your private, personal information will be handled and maintained securely:
- American Institute of Certified Public Accountants
- American Academy of Attorney CPAs
- National Association of Tax Professionals
- National Association of Enrolled Agents
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Prevent Unethical Tax Preparers Stealing Your Refund
Never, ever sign a blank return and send back to the tax preparer for further editing without your final approval.
An unethical tax preparer could potentially steal your refund if you were to sign a return with no data that is blank. The way your refund can be stolen is by the tax preparer putting their own bank account on your return.
Prepare For A Tax Audit
Preparing for an audit should be done before the IRS summons you for an audit.
A tax preparer with a PTIN is not permitted to represent you in front of the IRS in the event of an audit. By contrast, the following credentialed tax preparers could assist you:
- Enrolled agent
To further avoid risk of being left alone to represent yourself in an IRS tax audit, verify that your tax preparer does not work seasonally alone; you will want your tax preparer to be available to represent you year round.
Does Your Tax Preparer Disclose Additional Charges?
One important thing to consider is whether your tax preparer discloses any additional charges upfront. The last thing you want is unhappy surprises at tax time!
Many CPAs charge extra if they have to file your taxes in more than one state. For example, if you do business in multiple states, you likely will have to file a separate tax return for each state.
Some CPAs charge for each tax form they fill out, which is fine. But if the tax preparer doesn’t tell you that they will be charging extra unless you make a point of asking, that’s a red flag that this is not the best tax preparer for you.
After all, if your tax preparer isn’t willing to be honest about how much the service costs, can you really trust them to follow the rules when working on your taxes?
What Type of Document Security Does Your Tax Preparer Use?
Document security is of key importance when working with a tax preparer. Many preparers expect you to provide electronic tax documents to them, and these documents often contain sensitive information such as your social security number and full legal name.
For this reason, you want to work with a tax preparer who is aware of cyber security concerns. You’ll want to take extra steps to ensure that hackers and identity thieves don’t get their hands on your information!
Tax preparers who are aware of the security concerns usually have a secure portal for you to upload your documents. This is a password-protected website where you log in and then upload. Only people with the password (you, your tax preparer, and any staff that is assisting the tax preparer) have access.
This is far more secure than email, which could be more easily hacked. Beware of any tax preparer who asks you to email documents as attachments rather than allowing you to upload them to a password-protected site.
What Is Your Tax Preparer’s Response Time?
Your tax preparer works for you, so don’t hesitate to ask them questions. Ideally, the tax preparer will answer you quickly.
24 to 48 hours is reasonable, though if it’s getting close to a tax deadline you may need to give them more time because of the amount of work they have to do to get all their clients’ tax returns ready.
You don’t want a tax preparer to ever leave you hanging. If your tax preparer takes weeks to answer your questions, sends quick non-specific answers, or seems to be in a rush to get rid of you when you contact them, that’s a giant red flag telling you to look elsewhere for tax help.
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