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Choosing the Right Tax Preparer for You

By Chuck McCabe | February 6, 2019
Posted in: Individual Tax

Peoples-Tax-Preparation

Why Not Do It Yourself?

If you enjoy the challenge of tackling Form 1040 and have ample time to study the tax laws, plus the ability to comprehend them, by all means, you should save money and prepare your own tax return.  But if you’re like the majority of American taxpayers, the “do it yourself” route could be a costly mistake.  Even if you can find time to muddle through the tax laws, you’re not likely to learn everything you need to know to minimize your tax bill.  Chances are you’ll spend many frustrating hours and still wind up paying more than your fair share.  Given The complexity of our tax laws and ever-increasing demands on our time, being a once-a-year tax expert isn’t practical.

What Factors Should You Consider?

Who you choose as your tax preparer and how much you pay for this service may depend on the complexity of your personal tax situation and your personal preferences.  Below are some considerations to help you select the best tax preparer for you.

Tax Knowledge

Unless you are interviewed by a relatively knowledge tax specialist, you may file on the wrong form or overlook important tax considerations that could save you money.  Every taxpayer needs an advisor who knows all the questions to ask pertinent to his or her specific tax situation – especially now that there are new tax laws to factor in.

Credentials

Virginia has no licensing laws for tax practitioners–anyone can “hang out a shingle” and set up shop as a tax preparer.  Also, an individual might have credentials generally associated with tax knowledge and not be qualified to prepare non-routine individual tax returns.  Relevant education and experience are necessary for anyone to competently prepare the wide array of individual income tax returns filed by the general public.  A tax attorney or a CPA who specializes in individual income tax law is obviously qualified.  But many CPAs and attorneys learn and practice corporate taxes only.  Individual income tax preparation is a complex and specialized field of study.  A very significant credential in the field is the Enrolled Agent (EA), attained by passing an intensive exam administered by the IRS.  An E.A. is authorized to represent taxpayers before the IRS. Another good indicator of individual competence is experience in teaching tax preparation at a recognized school.  Regardless of credentials, competent tax preparers must keep current on the ever-changing tax laws through education.  Ultimately, knowledge and experience are the best credentials.

The IRS launched the Annual Filing Season Program in January 2015. This program is designed to recognize the efforts of non-credentialed return preparers who aspire to a higher level of professionalism through yearly training and testing. It was also designed to help taxpayers choose a competent and ethical tax professional through a directory.

As a taxpayer, you can search the IRS Directory of Federal Tax Return Preparers with Qualifications and Select Qualifications on the IRS website.  In addition to preparers with credentials such as EA and CPA, the directory will include those who have completed the new IRS Annual Filing Season Program.

Read more about the Annual Filing Season Program.

Accuracy

There can be only one correct result for an individual’s income tax returns; the one that yields the lowest legitimate tax, which translates to the smallest tax bill or largest refund possible.  Judge Learned Hand, a renowned American lawmaker, once said:

“Anyone may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one’s taxes…”

Since anyone can make a mistake, your return should be checked for accuracy, both in math and theory, by a tax specialist other than the preparer. Computerized processing of tax returns helps to ensure thoroughness and accuracy, provided that a good software package is used by a knowledgeable tax professional.

Professionalism

Having your taxes prepared can actually be a pleasant experience if you’re being served by a true professional; and you shouldn’t have to pay a premium for professional service. You should expect a pleasant office atmosphere with a reasonable degree of privacy and comfort.  You should also be treated with respect and courtesy.  You shouldn’t feel as though you’re just another number being processed production line style.  Of course, your personal and financial information should be held in strict confidence.  Finally, the person or firm you select should have unquestionable integrity.

Personal Service

Your tax preparer’s job is to become thoroughly familiar with your personal financial situation and help you provide the information necessary to minimize your taxes.  He or she should inform and educate you on the tax laws affecting your personal situation.  This information will enable you to make decisions as to how your return is to be prepared.  Your tax advisor should be working to help you avoid problems with the IRS, but should not behave like an IRS auditor.  By the end of your interview, you should have no question that all your personal concerns were addressed and your best interests were served.  Basically, the best tax preparers are not “tax technicians.” They are knowledgeable individuals who have empathy and genuine concern for the best interests of each one of their clients.

Convenience

Most people prefer to have their taxes prepared at an office near where they live, shop or work.  Many taxpayers can only find time to get their taxes done in the evening, or on a Saturday or Sunday.  Fast service is also important to most clients.  Some people are willing to pay a premium to have their tax advisor come to their own homes or offices.  Others prefer to walk-in at their convenience, and many prefer to make a specific appointment.  Convenience is important, but other factors should outweigh convenience when your personal tax situation becomes more complex than average.

Availability

Even if your tax preparer meets all of your criteria, will he or she be there for you in the summer when you get a letter from the IRS?  Will the tax preparer still be around to help next year, or five years from now when you need tax assistance.  A reputable tax preparer will be available year-round, year-after-year to provide assistance with any tax problems or questions.  The greatest stability may be available through an established, reputable firm rather than an individual tax practitioner.  Yet, most people who seek tax assistance prefer to see the same friendly face year after year.  Therefore, a firm that retains its good people for a long time would probably be a good bet, all other things considered.

Guarantee

What happens if your tax preparer makes a mistake that costs you penalties or interest?  Suppose you are audited by the IRS?  What if you are not satisfied with the way your return was prepared?  Before you contract with a tax preparer, you should find out the answers to each of these questions.

Price

The cost of preparing any tax return can vary dramatically among different tax practitioners.  IRS law prohibits tax preparers from basing their fees on the amount of tax refund obtained by the client.  Many tax practitioners charge by the hour, others operate from a standard schedule of charges, and some simply charge “what the traffic will bear.”  Higher levels of tax expertise typically command higher fees.  Ideally, you will find a tax professional with the level of expertise you need for a price you can afford.  Perhaps the fairest basis for setting fees is the complexity of the income tax return, determined by the schedules and statements required. This method enables a price to be quoted in advance that will apply regardless of how long it may take for the tax preparer to complete the return. If your tax return is complicated, a tax practitioner may have difficulty quoting an exact price before conducting a thorough interview.  However, your candidate should be able to give you an approximate fee in advance if requested.  To obtain a price estimate by phone, be prepared to describe your tax situation in detail.  Having last year’s tax return in front of you will help.  Most people who inquire about price simply want a “ballpark figure” to determine whether the cost will be reasonable and affordable.  Be wary of tax practitioners who avoid disclosing the basis for their fees in advance.  You should also ask if you will be charged extra for tax information should questions arise later, or for assistance in the event of an audit.

Like any other consumer purchase, unless you obtain a strong recommendation from someone whose judgment you trust, you need to shop around for the best value. At Peoples Tax, we offer all of these things and more! Whether you self-prepared last season or used another tax service, we’ve got a deal for you. Switch over to Peoples Tax this year and save $100! Learn more here.

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