Unlike baseball caps and Snuggies, there are no one-size-fits-all tax preparers. Some of us only need to file simple 1040-EZ forms that we could probably do ourselves. Others may need someone who is an expert in rental property or Schedule C (business) returns or a tax preparer who focuses on small business or nonprofit organizations. As clients, we all have our specific, special circumstances when it comes to filing and paying our taxes.
How do we find the perfect fit when it comes to a tax preparer? As with hiring any professional, the key to finding the perfect fit is to ask questions. Here are some things to keep in mind when you talk with a potential tax preparer.
Before you talk to a tax preparer, the best advice is to get a referral from someone you know and trust. Ask around and find out who other people are using and if they like them. After all, you wouldn’t go to a new hairdresser or doctor without checking them out first.
Once you have secured a referral or two, check to make sure the preparer is properly credentialed. Ask for their Preparer Tax Identification Number. This number is required of anyone who is paid to prepare federal tax returns. Without a PTIN, a tax preparer is not allowed to prepare returns. If they don’t have a PTIN, get away from them fast. The IRS has an online directory that lists tax preparers and their qualifications at j.mp/2GIhoE7.
Make sure your tax preparer is well-versed in state and local tax filing requirements and laws. Federal tax laws are the same across the country. However, local and state taxes change from one area to the next, especially for business owners. It can also get complicated if you work in one state and reside in another.
Ask your tax preparer what records and other documentation you will need to provide to properly file your return. If a preparer isn’t inclined to do the necessary due diligence in the beginning, it should be a red flag about other shortcuts they may be willing to take later. For example, you shouldn’t use a tax prepare willing to e-file your return just using your pay stub. That can get you in trouble with the IRS in a hurry!
How are fees determined? Your cost will most likely be based on the complexity of your return, such as the additional number of schedules (such as Schedule B interest or rental and income losses on Schedule E). Be very cautious of preparers who work on a commission. Doing so may create a financial incentive for them to declare inappropriate credits and deductions.
Make sure who will sign the return. Your preparer’s PTIN and signature are required to appear on the return. If your preparer refuses to sign a return or asks you to sign saying the return was self-prepared, go somewhere else!
Ask about assistance if a problem or question arises after tax season. Know how you can contact your preparer after your return has been filed. There are preparers who work only during the tax season and those who employ a large, year-round staff. This is the reason to avoid shops that are only open during tax season, then closed the rest of the year.
Don’t be shy about asking questions and doing a little research. You are not well-served by changing preparers every year or so. Your goal when searching for a tax preparer should be to find someone with whom you can establish a professional relationship. That relationship is what a good tax preparer wants too!
Cheryl Parson is president of the Better Business bureau serving West Central Ohio. The BBB may be found on the Internet at www.lima.bbb.org.