For many people, doing their own taxes is simple and they feel confident using one of the tax preparation software packages like Turbotax or TaxAct. If, however, you have decided that you want to hire a professional to prepare your taxes, you may now be wondering how to find the right person.
You want someone who offers the best value, not necessarily the cheapest. You want someone that you can trust will do the job correctly, will find you all the deductions to which you are entitled, without crossing the line into potentially illegal activity. And, you want someone that you can work with for a long time, so you don’t have to go through the process of finding a new tax preparer every year.
You could go to one of the retail chain tax preparers, like H&R Block or Jackson Hewitt. If you already have a CPA who works on your bookkeeping, that person can probably also do your taxes. Or you may ask friends or family for recommendations. Be sure not to ask friends and family for any actual tax advice, unless they are qualified to offer it.
Once you have found someone you think might be right for you, then you need to interview him and ask some questions. Ask all the questions that you need to ask, enough to make you feel secure that you can count on this person to do the best job for you. If he shows impatience with your questioning, or if you are uncomfortable with any of his answers, then you should probably look for someone else.
Here are five common areas that you can start with, when interviewing a potential tax consultant.
- Experience and Credentials: Do you specialize in any particular tax situations? What kind of experience do you have with preparing taxes for people in my situation? How long have you been preparing taxes? What kind of licenses and designations do you have? You may want a CPA or an EA (Enrolled Agent), which is a person who has trained and passed rigorous IRS testing, including a background check.
- Fees: How do you charge? Do you charge hourly, or by the project? Are there any add-ons or additional fees, such as for audit prep? Some charge by the number of forms and schedules that must be completed – the more complicated your tax return, the more it will cost to have it prepared.
Be especially wary of anyone who offers to file your taxes in return for a
share of your refund. Or anyone who guarantees a particular refund, or
that they can deliver a larger refund than other prep companies. It is quite
possible that these sorts of companies are pushing the legalities of
deductions in order to generate larger returns for their clients.
- Personnel: Who will be doing my return? Will it be you personally, or will it be an employee of yours? If it is someone who works for you, what is their experience? Will you be supervising and reviewing the return before I get it?
- Changing Tax Laws: How familiar are you with people in my specific tax situation? Are there any recent laws or regulations that affect my situation? Your tax consultant should be informed about any and all changes to the tax code, and any proposed changes, in order to advise you as to the best course of action for your specific situation.
- Audits: What is your policy in case of an audit? Do you back up your return with audit prep if necessary? Will you respond to the IRS if I am audited, and will you attend the audit either with me or in my place? If the IRS discovers a mistake on my return that was your fault, will you pay any potential penalties? Any additional work on the part of the consultant in terms of addressing an audit situation will probably incur more fees, but at least you want to know that your preparer will be there to help if necessary.
Choosing a tax consultant is an extremely important decision, because your taxes are one of the most important legal documents you will ever file. No matter who prepares them, you are responsible for their content. So make sure you choose someone who is competent and honest, and who will be a trusted business partner for many years to come.