How to Choose a Tax Preparer
If your tax situation is convoluted, you may choose to hire a professional tax preparer. Many people prefer to pay an expert in order to avoid costly IRS penalties, which can include additional taxes and interest.
You should carefully choose your preparer, considering you will be legally responsible for the return, no matter who prepared it.
Types of Tax Preparers
Smart Ideas: Taxes Revisited
Tax lawyers charge the most among all types of tax preparers today, and are only good for those with extremely complex tax situations.
Certified Public Accountants (CPAs)
To know about the training and credentials of CPAs, you can check the website of the American Institute of Certified Public Accountants.
To know the training and credentials of Enrolled Agents, log on to the National Association of Enrolled Agents website.
National Tax Preparation Service Providers
Tax preparation service providers offer different specialties and levels of experience, charge the least, and are typically used for simpler tax situations.
Steer clear of tax preparers who:
> Promise they can get you a bigger amount in refunds than any other preparer;
> Want you pay them a portion of your total refund;
> Have been the subject of complaints filed at such organizations as your state board, and the Better Business Bureau.
It is very important for your tax preparer to be experienced with tax forms needed for your specific situation. Also, discuss possible costs prior to committing to hire a tax preparer.
Here are the most important questions you need to ask them:
> What is your maximum charge?
> Are you going to prepare my tax return yourself, or is it going to be someone else and how do I contact this person?
> How many of the forms I need do you prepare every year, and are you an expert in the special rules that might apply?
> For example, if you need to file a “dual status” tax return (being a tax resident for only part of the year), ask what number of dual status returns your prospect usually preparer year after year.
After finishing with your return, the tax preparer is legally required to sign the document, fill in the preparer portion of the form, include his identifying number, and give you a copy of the return for reference. Make sure you:
> Check if all the details are correct, both your tax information and your personal information, such as your name, address and the like;
> Understand all items on the form;
> Check the “Third Party Authorization” box (if you want the preparer to deal with the IRS when necessary; and
> Affix your signature on the return.
Finally, don’t ever sign an empty return or with a pencil.