Almost a third of American taxpayers still rely on professional tax accountants to prepare their tax returns. So choosing a reliable and trustworthy tax preparer is an important financial decision. Remember that you will be sharing confidential information about your personal life and your finances. Also, you cannot let just anyone handle your taxes for you.
Looking for the best tax preparer near you? Here are the things you should be considering:
Preparer Tax Identification Number
People who get paid to assist or prepare taxes need to have a Preparer Tax Identification Number.
It is issued by the IRS to be used by the tax preparer instead of their Social Security Numbers. So, make sure your tax professional has one. Also, the IRS requires your tax preparer’s PTIN in your tax returns. However, volunteer tax preparers don’t have a PTIN. The PTIN is only issued to those who get paid for their tax preparation services.
Know where to look
First, don’t be afraid to ask around. Referrals are good indicators of performance and reliability. Second, look at people in a similar tax situation as yours and ask for a recommendation. However, take their advice with a grain of salt and still do your background research. Lastly, it’s good to know where to start looking.
Other organizations that have fully-trained tax preparers with codes of ethics are the American Institute of Certified Public Accountants and American Academy of Attorney CPAs. These people are certified, so you know for a fact that you’re in good hands.
Look for professionals with a license
First, find an accountant you can trust.
Choose someone with credentials to give you peace of mind, even if that means more expense. Remember, these are CPAs, Enrolled Agents, tax lawyers, and other licensed professionals, and that means proper training and authority
Also, go to the IRS directory for a list of certified tax preparers with PTINs. Another reliable portal with a tax preparer database is through state organizations.
Finally, ask if they file taxes electronically. The IRS now requires preparers to e-file taxes beyond 10 returns, so if your preparer doesn’t do e-filing, then that could be a yellow flag.
Compare their professional fees
By now, you probably know that getting an accountant is no joke to your wallet. Also, it’s common that professional tax preparers charge by the hour.
But if you come across someone who says the rates depend on the size of your refunds, that’s probably a red flag. Remember too that you would probably spend an average of $150/hr for audit representation.
Check if they will represent you
Be mindful. Just because your tax preparer has a PTIN doesn’t mean they are authorized to represent you in front of the IRS in case you get audited.
Only CPAs, Enrolled Agents, and Tax Attorneys with PTINs can represent you for any IRS issues regarding your tax returns. However, if you think there’s a slight chance that you might get audited or you might encounter any problems during tax season, confirm first if they will represent you.
How do I find tax services near me?
- District of Columbia
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Rhode Island
- South Carolina
- South Dakota
- West Virginia
When should you hire a tax accountant?
First, ask yourself first if your tax situation really calls for a professional tax preparer. There are various reasons why people opt to hire an accountant rather than prepare their taxes themselves. Here are some common situations whe getting an accountant is a smart choice:
1. You own a business
If you run your own business or if you are self-employed, you might need an accountant to guide you in preparing your taxes. This way, you can be sure that you are claiming all eligible credits and deductions for small businesses.
2. If you experienced major life changes within the tax year
First, significant life changes also mean major tax adjustments. Some examples are getting married or getting divorced, having children or sending children to school, getting a new job, or filing bankruptcy. Since you would need to adjust the usual taxes you’re used to preparing, then hiring an accountant is probably your safer option.
3. A complex tax situation or unfamiliarity with preparing taxes
Are you one of those people who hate forms and numbers? Now, you don’t have to risk making an incomplete or an incorrect return. Accountants can also first assess your situation and then complete your taxes for you. If you have a complicated tax situation, you might also want their advice on how to maximize your returns. You can also consult your tax accountant about your business and tax records.
4. You are facing tax problems
If you have failed to file or pay your taxes in the previous years, then an accountant can help you sort out your tax debts. Or help you face a tax audit.
Additionally, your tax accountant may also have suggestions on how to resolve your tax situation. Moreover, there are several IRS programs for people who are financially unable to settle their taxes, and an accountant can also help you file all the necessary forms.
Lastly, an accountant can also help you in applying for payment plans with the IRS to avoid further issues.
5. You bought a new home
If you recently purchased a house, an accountant can now help you take advantage of all the benefits. And she can also help you adjust withholdings. Moreover, any major purchase changes your tax situation dramatically.
First, hire a tax accountant only for the first year of your purchase. Then you can revert to preparing your taxes when you feel more comfortable with the adjustments.
6. When you don’t have time to prepare your own taxes but you want added accuracy and service
Hiring a professional tax preparer will cost you.
And a cheaper alternative to that is using a tax software instead. If you have a relatively simple tax situation, it will be a breeze to file your returns online. It is also more accurate. Or let’s say you are familiar with taxes and there’s no significant life change in your previous tax year.
When you don’t need an accountant, use tax preparation software
More or less, you have an idea of which forms and which credits you are qualified for. Even if you don’t know what your eligibility, various tax software have tools to help you maximize your returns. Also, some software such as LocusTax even let you start your returns for FREE.
Be mindful that more complicated tax returns mean paid packages. Free and paid tax software offers the same reliability. However, it requires a little bit more effort on your end since you’ll be handling your taxes yourself.
But if you are on a tight budget, a tax preparation software is the cheaper choice. Definitely cheaper but still accurate nonetheless.
Questions you should ask your tax preparer
- How long have you been preparing taxes and what are your licenses or credentials?
- Second, what do you specialize in and how long does it usually take you to complete returns?
- How much do you charge for your services?
- In case I need audit representation, can you represent me?
- Lastly, do you outsource any part of the tax preparation process and will these third parties have access to my personal information?