How to Select a Tax Preparer

Face it, filing taxes is a complicated chore. Tax filing is particularly challenging if you have many income-producing assets, multiple income sources or you own a business. You will probably seek help this year to file your taxes.

According to the IRS, in 2015, more than 78 million tax-e-filers received help from a tax preparer.

So, if you want to hire a pro to help you file taxes in 2016, you are not alone.

While many individuals and several retail chains promote tax filing assistance, not all preparers are the same. You should not select a preparer solely on price.

Red Flags for Tax Preparers You Should Avoid

The IRS recommends that you not engage any tax preparer, who:

  • Lacks a tax preparer identification number
  • States that they will not sign your return
  • Promises you a large refund (before they even review your records)
  • Asks you to sign a blank return
  • Requests that you deposit your refund into their bank account

You should also avoid a tax preparer who offers to take a percentage of your refund. You want a truthful tax filing not one based on gimmicks, for which you will be responsible.

Criteria for Selecting the Best Tax Preparer for You

If you have a very simple return, a retail tax preparation outlet may work for you. Employees at these chains do get some training from the company. They typically do not have professional tax preparation training. These retail employees usually rely on the software provided by the franchise.

Individuals with more complicated tax profiles should engage an experienced and credentialed tax preparer. Individuals with IRS-recognized tax preparation credentials include CPAs, Enrolled Agents and Attorneys.

Only individuals with these three professional credentials can represent you before the IRS on all matters. If you hire a rep at a retail store and you have a problem, you will likely be on your own to deal with the IRS.

Select the Right Tax Professional for You

To select the best tax preparer for you, ask the individuals you are considering if they:

  • Have an IRS Preparer Tax Preparer Identification Number (TPIN)
  • Have worked with individuals with a tax profile similar to yours. For example, if you own a small business, you should go with an accountant who regularly prepares small business tax returns.
  • Attend continuing education courses on tax regulation each year. Tax law changes constantly and you want a preparer with up-to-date knowledge.
  • Will provide you with an estimated fee for preparing your taxes.
  • Will submit your return via the IRS e-file system. Any preparer with more than 10 paying tax prep clients must e-file.
  • Have a process they follow for new tax clients. Most experienced tax preparers have a thorough interview and document gathering process.

Do remember that you are ultimately responsible for the information provided on your tax return. If you hire someone else to prepare your taxes, review your filing carefully before you (or your chosen professional) submit it to the IRS.

If you need help this tax season, please contact us at THEODORE T. NGUYEN, CPA, PC. We have helped individuals, small business owners and non-profits complete their tax returns for more than 35 years.