tax preparer

The Right Way to Choose a Tax Preparer

Who needs a tax preparer? And, if you do, how can you know the right way to pick one? There was a time when most citizens could do their own tax returns. But as they allegedly simplify tax filing, the tax laws expand.

If you have kids in college, own a business, work as a freelancer, or have complicated your earning status, you may need a qualified tax preparer.

It makes things more convenient, accurate, and professional. You stand to save money, reduce taxes, and avoid penalties.

Signs of Quality Service

There are situations where you can prepare your own taxes easily. The are others where software can do the job. But if you need advice from a tax preparer, you should look for key indicators of quality:

Confirm Preparer has IRS Number notes the Internal Revenue Service requires all tax preparers to get a PTIN (preparer tax information number).

The IRS created the PTIN to protect the privacy of tax preparers by giving them an option to using their Social Security numbers. The preparer can apply online, and no fee is required.

Identify Registered Tax Return Preparer

Some preparers do not have to register with the IRS. There are lawyers and CPAs, for example, who do not sign your returns. But anyone not exempted from testing and registration must secure an RTRP (Registered Tax Return Preparer). Registration requires the PTIN and competency testing.

Look for State License

All but eight states accept the IRS requirements as enough. The eight impose varying requirements. These states all exempt certain classes of preparers and require a high school diploma or GED.

  • California requires state-approved education, continuing education credits, and a $5,000 bond.
  • Connecticut has performance standards and penalties for violations requires preparers to commit to disclosure agreements preventing identity theft and tax overpayment, and bi-annual permit fees.
  • Illinois directed its Department of Revenue to come up with rules banning and penalizing tax preparers for specific reasons.
  • Maryland requires tax law training, continuing professional education credits, and testing every two years.
  • Nevada requires tax preparers to renew their registration annually for a modest fee, but it also required a deposit of a $50,000 surety bond.
  • New York requires licensing for those who prepare 10 or more filings annually in addition to four hours of continuing education each year.
  • Oregon requires testing following 90 hours of tax law.

Ask About Fees

Forbes recommends asking how the tax preparer determines their fees instead of asking what they charge.

“Prices may vary based on the complexity of your return, [but] be wary of preparers who base their fee on a percentage of your anticipated refund: they have a financial incentive to encourage inappropriate credits and deductions.”

Check on the Record

You can ask the preparer what kind of tax work and forms they have experience with.

Research the scope and performance of tax preparer firms like the Gudorf Tax Group. You can check the Better Business Bureau and/or state or national professional associations.

Do You Know the “Right” Way

What you need varies from person to person, from family to business, and from small business to large. But choosing a tax preparer that’s right for you takes some research on your part.

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