How to pick the right tax preparer

How to pick the right tax preparer

A good one can ease stress and might save you some money, too

Last updated: February 05, 2015 12:00 PM

On the fun scale, tax preparation ranks down there with wart removal. And like warts, tax returns can come back to haunt you. The best way to prevent problems from cropping up later is to pick the right tax preparer—or get the right tools if you decide to do it yourself. If you have few itemized deductions, don't work for yourself, and don't have other complicated money issues, do-it-yourself tax prep is relatively easy. But if you're like the more-than-60 percent of Americans who have their returns done for them by a tax preparer, here's what you need to know to get the most value for your tax-prep dollar.

Pick the right pro

The IRS offers a search page where you can find tax preparers who meet the agency's qualifications to prepare federal returns.

Tax preparers have varying levels of expertise and charge accordingly. These are your basic tax-prep choices:

  • Certified public accountants. Not all CPAs specialize in doing individual income-tax returns, so ask up front. In addition to using the IRS's tax-preparer search page, you can check with friends and neighbors or go to your state's CPA society (type "CPA society" and your state's name into a Web browser).  
  • Enrolled agents. Unlike CPAs, who can handle a variety of financial activities, EAs focus solely on taxes. They must have worked for the IRS for at least five years or passed exams on tax codes and calculations. Enrolled agents might work for themselves or in a CPA firm or storefront office. The IRS tax-preparer search page can help you find one, or you can go to the website of the National Association of Enrolled Agents.
  • National tax-prep chains. Storefront operations like H&R Block, Jackson Hewitt, and Liberty Tax Service can be adequate for simple, straightforward returns, and they're relatively inexpensive. The not-for-profit National Consumer Law Center says national chains are less likely than independent storefront tax preparers to hit you with "junk" fees, such as application and document-prep charges. Tax preparers in franchise offices of the national chains have usually passed at least a several-week-long course, and newcomers' work is reviewed by experienced supervisors, according to the companies.
  • Free tax prep. If your household income was low to moderate for your community or you're 60 or older, you might not have to pay anything for tax help. The AARP Foundation Tax-Aide service will pair you with trained volunteers who can handle Form 1040 and schedules A and B.

See our Income Tax Guide for more advice and tips on preparing, filing, and saving on your income tax return.

Ask the essential questions

Before you sign up with any preparer, ask some basic questions about his or her background.

  • Do you have a preparer tax-identification number? All paid tax preparers, whether they’re enrolled agents, CPAs, or tax attorneys, must have such a number, called a PTIN.
  • What are your credentials? Make sure that your prospective preparer has passed recent state or federal tests. (California, Maryland, and Oregon require licenses.) Look for seven to 10 years of experience to ensure that your preparer has dealt with a variety of tax and economic situations. Ask, too, if the preparer is a member of a professional organization related to tax preparation and attends continuing education classes.
  • What kinds of clients do you usually work with? Look for a preparer with clients similar to you.
  • Will you file my returns electronically? Filing electronically ensures fewer mistakes and helps speed your refund. Your tax preparer should be able to handle it for you. (Tax preparers who handle 10 or more returns are required by the IRS to file electronically unless the client opts to file a paper return.)
  • Can you give me a price quote? Tax preparers often say that they can't tell you what they'll charge until they determine which forms you'll need. But you can try to pin down the preparer by presenting last year's forms or by asking for a list of all fees. Avoid preparers who base their fees on a percentage of your refund.
  • Do you provide audit help? CPAs and enrolled agents can usually represent you before the IRS. The national chains provide free advice to clients, but you might have to pay extra to have someone accompany you to an audit or talk to the IRS on your behalf.

Get organized

The earlier you get your tax act together, the better the result is likely to be. So try to see the preparer in February or early March. You'll also save time and money if you:

  • Know your numbers. Collect all of your family's Social Security numbers and those for child-care providers. The fewer blanks you have to fill in later, the faster you can file and get your refund.
  • Lose the shoe box. Don't show up with a shoe box of random financial statements. Buy an accordion folder and use each section for different categories: one for Form W-2s from jobs, another for Form 1099s showing interest and dividends, and so on. Bring your folder and official forms to your preparer; tally charity receipts and the like beforehand. Also make sure you have copies of your prior-year federal and state tax forms.
—Tobie Stanger @TobieStanger

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