Getting the right tax preparer may keep you from being audited by the IRS, save you on taxes payable by claiming the right deductions and credit, provide a more time and cost efficient service, among many other benefits. You therefore, need to carefully select the tax preparer to handle your taxes. Below are 7 tips that you can use to review a tax preparer before taking up his or her services:
1. Licensed by the IRS as a Tax Preparer
The first check for any tax preparer is to confirm that he or she is licensed by the IRS. In 2011, the IRS introduced new regulations for tax preparers. A tax preparer is now required to obtain a Preparer Tax Identification Number (PTIN) and an annual preparer license from the IRS before practicing. Preparers who are not Enrolled Agents, attorneys or CPAs will be required to sit and pass a test and undertake annual continuous training to keep their license. Therefore, ensure that your preparer is licensed and has a PTIN.
2. Professional Qualifications of Preparer
Besides the PTIN, it may also be advisable to seek for further professional qualifications. Depending on the nature of your returns, you may require an accountant or even an attorney to handle your returns. You should therefore check for such professions. You should also review the preparer with various professional bodies that he or she is a member of. You can use services such as Better Business Bureau to verify integrity of the consultant.
3. Costs of Services
You should also review the fees charged by the preparer. Different methods are used to charge the consultancy fees. Some preparers charge an hourly rate while others charge based on complexity and number of forms being filed. According to a survey done in 2010, the average paid by those interviewed was $233 for a State and IRS return for taxpayers who were itemizing and $128 for state and Federal returns for taxpayers who were using standard deduction. Therefore, ensure that you are not overcharged. You should also stay away from preparers who use unprofessional ways of charging fees such as fees structure based on the amount of refund that the preparer is able to get you.
4. Scope of Work Handled by Preparer
Preparers handle different aspects of tax and you need to ensure that a tax preparer provides the services that you require. Some tax preparers handle only IRS taxes while others handle Federal, State and Local taxes. Some tax preparers only handle certain types of taxpayers while others will not handle issues such as late taxes, installment tax requests, or tax representation. You therefore, need to know the scope of work of a given tax preparer before committing.
5. Years of Experience
The years of experience are also an important factor to consider for tax preparers. Tax is a complex subject and there are many different situations and matters that may arise. For this reason, experience plays an important role in knowing how to handle complex tax issues and how to deal with the IRS. It is therefore, advisable to seek a preparer with considerable years of experience in the business.
6. Support in Case of an IRS Audit
Some tax preparers and tax software firms provide an undertaking to represent you or provide support free of charge should the IRS want to audit you for returns that the preparer filed or that you filed using the tax software. Other tax service providers do not give such an undertaking. Therefore, you need to consider such terms before signing up for the preparer services.
7. Tax Support beyond Filing
You also need to find out if the preparer is available for any advice or tax support during the year. Some preparers are only available during peak tax season just for the services of filing returns. They are not available for any further tax consultancy such as representation, or even tax advice.