|InvestorMint provides personal finance tools and insights to better inform your financial decisions. Our research is comprehensive, independent and well researched so you can have greater confidence in your financial choices.|
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?
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
- Discover>> Best Tax Software
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.
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
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.
Discover>> Best Tax Software