- Days left

Tax Filing: Tips for Picking the Right Tax Preparer (Hint: It's Probably Not Uncle Ed)

×
Tax preparerSure, your Uncle Ed might be happy to prepare your tax return for you, but think twice before accepting his help. The price might be right, but he might cost you more than you know in the long run if he misses tax credits or deductions that you should have taken advantage of.

The tax code is incredibly dense and complicated and changes frequently, so it's often worth enlisting the help of a skilled pro. Just choose wisely.

Types of Preparers

There are several different kinds of folks who can prepare your return, besides well-meaning friends and relatives. Certified public accountants are an obvious choice, though not all of them deal with individuals' taxes. Enrolled agents are an excellent option, too. They're federally licensed pros who focus solely on taxes and are allowed to represent clients before the IRS. The National Association of Tax Professionals includes CPAs, enrolled agents, and other tax pros, and is another source of candidates.

You can gather candidates by asking friends or family for referrals. You'll also find preparers waiting for you through tax-preparation service companies such as H&R Block (HRB), Jackson Hewitt, and Liberty Tax Service. And the folks at AARP offer the AARP Foundation Tax-Aide program, offering free tax-return preparation, targeting those with low to moderate income and those age 60 or older in particular.

Military personnel have an extra option, the Volunteer Income Tax Assistance Program, or VITA, which offers free tax-prep assistance. Low-income non-military taxpayers may also be able to tap this program.

Ask the Right Questions

Once you have some candidates for your business, check them out before signing on with them. Ask for referrals, and for a (no-charge) interview, as well. Here are some questions to ask:
  • What's your experience, education, and familiarity with new tax laws? You need to be confident that the preparer is a savvy one.
  • How much will you be charging me? Get at least an estimate, as you don't want to end up unpleasantly surprised. Find out how the fee is calculated, and avoid any fee based on the size of your refund.
  • How soon will the work be completed?
  • Who exactly will be preparing my return? Are you speaking with the preparer, or will your work be handed off to someone else in the firm? This question can give you a sense of how important your business is to the preparer. If an underling will be preparing your return, what are his or her qualifications and training? You also want to know who you will speak to if you have problems or questions down the road.
  • Do you have continuing professional education requirements, and how much of that do you complete each year? Ideally, a candidate will be regularly keeping up with tax-law changes, and perhaps even exceeding requirements. This is especially important if your tax situation isn't routine.
  • How aggressive or conservative are you? Tax returns are not always simple matters. When an issue falls in a gray area, it's good to know how the preparer will treat it.
  • Will I be able to contact you throughout the year? Remember that tax issues and questions can come up at any time, such as if you change jobs or marital status or are dealing with a loved one's death.
  • What security provisions do you have? You want to see steps taken to protect your privacy and prevent your information from going where it doesn't belong.
  • If I'm audited, will you represent me before the IRS? The ideal response is yes. Some preparers outsource your work, though, and may not represent you. Others may require you to be present, as well, which is not ideal. Be sure you're OK with the answer to this question.
The IRS itself offers some additional questions to get answers to before signing up with any preparer.

Be wary of any candidate making seemingly lavish claims (such as promising you a surprisingly hefty refund) or pitching his services aggressively. Also, do not sign any blank forms, and make sure that the preparer includes his own tax identification number and signature on your return, as required on the form.

If you choose not to hire a pro to prepare your return and would rather do it yourself, consider using tax-prep software, such as Intuit's (INTU) TurboTax. Be smart about your tax preparation, and you can save a lot of money -- and headaches, as well.

Motley Fool contributor Selena Maranjian has no position in any stocks mentioned. The Motley Fool recommends Intuit. The Motley Fool owns shares of Intuit.



Increase your money and finance knowledge from home

Basics Of The Stock Market

Stock Market 101 - everything you need to know but were afraid to ask!

View Course »

Introduction to Preferred Shares

Learn the difference between preferred and common shares.

View Course »

TurboTax Articles

What is IRS Form 8824: Like-Kind Exchange

Ordinarily, when you sell something for more than what you paid to get it, you have a capital gain; when you sell it for less than what you paid, you have a capital loss. Both can affect your taxes. But if you immediately buy a similar property to replace the one you sold, the tax code calls that a "like-kind exchange," and it lets you delay some or all of the tax effects. The Internal Revenue Service (IRS) uses Form 8824 for like-kind exchanges.

What are ABLE Accounts? Tax Benefits Explained

Achieving a Better Life Experience (ABLE) accounts allow the families of disabled young people to set aside money for their care in a way that earns special tax benefits. ABLE accounts work much like the so-called 529 accounts that families can use to save money for education; in fact, an ABLE account is really a special kind of 529.

What is IRS Form 8829: Expenses for Business Use of Your Home

One of the many benefits of working at home is that you can deduct legitimate expenses from your taxes. The downside is that since home office tax deductions are so easily abused, the Internal Revenue Service (IRS) tends to scrutinize them more closely than other parts of your tax return. However, if you are able to substantiate your home office deductions, you shouldn't be afraid to claim them. IRS Form 8829 helps you determine what you can and cannot claim.

What is IRS Form 8859: Carryforward of D.C. First-Time Homebuyer Credit

Form 8859 is a tax form that will never be used by the majority of taxpayers. However, if you live in the District of Columbia (D.C.), it could be the key to saving thousands of dollars on your taxes. While many first-time home purchasers in D.C. are entitled to a federal tax credit, Form 8859 calculates the amount of carry-forward credit you can use in future years, not the amount of your initial tax credit.

What is IRS Form 8379: Injured Spouse Allocation

The Internal Revenue Service (IRS) has the power to seize income tax refunds when a taxpayer owes certain debts, such as unpaid taxes or overdue child support. Sometimes, a married couple's joint tax refund will be seized because of a debt for which only one spouse is responsible. When that happens, the other spouse is said to be "injured" and can file Form 8379 to get at least some of the refund.

Add a Comment

*0 / 3000 Character Maximum