How to Find a Reliable Tax Preparer

These tips can help you locate a reputable professional and avoid problems

A person speaking to a financial advisor Photo: Thomas Barwick/Getty Images

If you need help preparing your tax return, there are lots of options to choose from. 

They range from big tax-preparing chains to small businesses that also sell insurance or other services to individual tax preparers. The trick is to find someone reputable who you also feel comfortable with.

How do you do that? Here are some tips to help out.

How Do You Know if You Need Help With Your Taxes?

First, figure out whether you actually need the help. If you have a simple return, meaning a 1040 without a lot of deductions, you can usually do your own taxes.

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If you have a couple of questions or don’t feel comfortable even doing simple returns, you can take advantage of numerous programs where volunteers will help you prepare your taxes, often free of charge.  

However, if you’re self-employed or a small-business owner, or if you inherited money in the form of investments, or sold investments, traded stocks, used or sold cryptocurrency—or any number of other complications—then you may want to consider hiring a professional, such as a Certified Public Accountant (CPA), an Enrolled Agent (EA), or a tax attorney.

Who Should You Go To?

Obviously, you want someone who has the right experience for your particular needs who can work at a price you can afford. The big chains employ many preparers, and if you‘re in a crunch, that could help you schedule an appointment more quickly than an individual who might be booked through April 18, tax day. 

There are many IRS designations for paid tax preparers and, ultimately, the most important things guiding your decision are the preparer’s credentials, experience, availability, and the help you can expect if the IRS requires more information from you after you file or if you’re audited.

For example, at a tax-prep chain, you’ll sometimes have to pay for additional help from a tax professional in case the IRS needs more information or if you’re audited, but you’ll likely have to opt to pay for the service when you pay for your tax preparation.

H&R Block’s “File with a tax pro” starts at $80 and can be done in-person or virtually. Prices vary depending on the complexity of the filing or the services required. Whether you use an individual preparer with credentials that allow them to represent you before the IRS or a big chain, it’s a good idea to discuss the cost of representing you in case of an audit before you hire them. 

Here are some of the important credentials and what they mean:

A Preparer Tax Identification Number (PTIN) holder is the lowest type of accreditation the IRS provides. A tax preparer with a PTIN—and no other credentials—is known as a non-credentialed preparer. If something goes wrong with your filing, this level preparer can’t represent you and help you deal with the IRS, unless they prepared and signed the filing before the end of 2015. You’ll be on your own or will have to hire someone to help you. 

IRS Annual Filing Season Program participant is the next level up. These are also non-credentialed preparers, however, each year they must take 18 hours of continuing education classes from IRS-approved providers. They also have an active PTIN, and must agree to specific rules of conduct (PDF). If something goes wrong with a filing, they have limited rights to represent you before the IRS. 

Certified Public Accountants (CPA), Enrolled Agents (EA), and tax attorneys are the highest credentials that a tax preparer can possess. These preparers are especially good for complex tax planning and tax preparation. They’re also qualified to help you with financial planning and can give you tips that could help you reduce your taxes in the future. Plus, if something goes awry, only these tax professionals can represent you before the IRS for all tax-related matters, whether it’s an audit or anything else. 

How Do You Find an Individual Tax Preparer?

Check the IRS’ Directory of Federal Tax Return Preparers. The American Institute of Certified Public Accountants helps consumers find a licensed CPA; it also can help consumers find local CPAs. Look for an EA through the National Association of Enrolled Agents.

What Should You Ask Before You Hire a Tax Preparer?

Ask your tax preparer whether their office is open year-round. Sometimes, tax-prep offices appear during tax season and then close once the season ends. Notices and letters from the IRS and your state tax authority can arrive at any time, and you’ll want your tax preparer’s office to be open if that happens. 

Ask for a price quote. The cost of preparing your taxes can vary, but generally an EA should charge less than a CPA, according to the Better Business Bureau. 

“The cost of preparing a tax return will vary depending on many factors, including the complexity of the return,” says Susan Allen, CPA/CITP, CGMA, senior manager for Tax Practice & Ethics, American Institute of CPAs. “For example, an entrepreneur or self-employed consultant may need more tax and financial planning services. Someone with life changes like marriage, children, retirement planning, a new home purchase, or college planning may also need more help,” she says.

Tell the preparer what forms you completed last year to give them a sense of what your tax needs are. This will help them give you a price estimate. However, don’t give the actual tax documents or provide Social Security numbers or other information when merely inquiring about their services and fees. You can also ask for a list of fees for various types of tax help to give you a better sense of the possible costs you’ll be facing.

In 2020, the average fee for having an accountant do a non-itemized 1040 federal and state return was $220, according to a survey of tax preparers and accountants from the National Society of Accountants. The average itemized Schedule A federal and state return cost $323. 

Look for a preparer with lots of experience. The more time a preparer has been working on tax returns, the more likely it is that the preparer will have dealt with a tax situation similar to yours. 

Ask your work colleagues, friends, and family for referrals. It’s a good idea to find a preparer accustomed to working with people who have similar financial profiles to yours. 

Make sure their expertise applies to your situation, because many preparers specialize in specific areas of tax law.

Choose a preparer who’s a member of a professional organization and attends continuing education classes. 

Make sure the preparer offers an IRS e-file and ask to e-file the tax return. Paid preparers who do taxes for more than 10 clients generally must file electronically.

What Are Warning Signs You Picked the Wrong Tax Preparer?

Avoid preparers who base their fees on a percentage of your refund—it’s a red flag that they may be engaging in unsavory behavior, according to the IRS.  

Search for complaints against the preparer with the Better Business Bureau.

Make sure the preparer signs their name and PTIN number on your return. In many Hispanic neighborhoods, travel agencies, insurance agencies, and others will prepare and file your taxes.

While these services are often legit, so-called ghost preparers will refuse to sign the tax returns they prepare. Not signing a return is against the law and is a red flag that your preparer may be looking to make a profit by promising you a too-big refund and charging fees based on the size of the refund, the IRS says. And remember, never sign a blank or incomplete return.

What Are Your Rights if You Get in Trouble With the IRS Because of an Error by Your Tax Preparer?

If your tax preparer made an error that leads to a higher tax payment, ultimately you’re on the hook to pay it. However, you can appeal to the IRS for a reduction in penalties, noting that the additional liability was due to a preparer’s error. You may also need to file an amended tax return.

The preparer may agree to handle follow-ups like this, and to represent you before the IRS in these cases. They may even cover the additional tax costs if they are due to a mistake they made. Many big chains advertise various guarantees, such as that your filing will be mistake-free and that they’ll get you your maximum refund, or your money back. Individual preparers may agree to cover any additional liabilities to the IRS incurred due to the preparer’s error.

In either case, review the contract between you and your preparer before you sign it, and make sure you understand exactly what the preparer will do for you if a mistake they make leads to you having to pay additional taxes.

Image of Octavio Blanco, editor at CR with Money CIA

Octavio Blanco

My mission: To write stories that broaden readers' horizons and offer new solutions they can apply to their lives. Who I write for: My family, my friends, my neighbors, myself, and—most important—you. My passions: Music, art, coffee, cheese, good TV, and riding my electric bike (for now). Find me on Twitter: @octavionyc