How to choose someone to do your taxes
How to choose someone to do your taxes
Are you about to decide on someone to complete your taxes? In that case, you need to know that you are legally accountable for what's on your tax return even if someone else prepares it for you. So be sure to decide on your tax preparer carefully. The IRS says more than 60 percent of tax payers pay a qualified person to arrange their returns every year. You need to look for someone who has an excellent understanding of taxes. Ask your family, friends, co-workers, and employer if they know someone that they believe to be a credible tax preparer. Decide on someone that you can contact at a later date and time if you need to.
An incompetent tax preparer could at the very least cost you money by omitting tax deductions and tax credits to which you are entitled. In a worst case scenario, the actions of a poor tax preparer might get you audited by the IRS and even result in criminal fraud charges. Your first decision is to choose what type of paid tax preparer you want to hire. You will find four general categories:
Enrolled Agents: An enrolled agent is a tax expert authorized by the federal government to represent taxpayers in all matters before the IRS, including audits, collections, and also the appeals process. In addition they receive their right to practice directly from the federal government, although lawyers and accountants are licensed by states.
Accountants: Not all accountants and certified public accountants specialize in tax, so be sure to choose one that does.
Lawyers: Lawyers who specialize in taxes have an LLM or a "masters in taxation". Tax attorneys usually handle only the most complicated returns, oftentimes for partnerships and small businesses.
Paid Preparers: They are the front-line employees you'll find at places like H&R Block. A few may have advanced education in the tax field (and they're almost always supported by employees elsewhere in the company that do) but oftentimes they've only undergone company-provided training and have no other special expertise.
It's essential for taxpayers to choose qualified tax professionals if they need help preparing and filing their tax returns. Unqualified tax preparers may overlook legitimate deductions or credits that could cause clients to pay more into taxes than they should. Ask about their experience with tax preparations just like the number of returns they have done, and how long they've been doing them. Remember, you are giving this person a lot of power over you and your life. You might be granting them access to the intimate information that is used daily for identity theft such as birth date, address, social security number, financial status, and bank account information. So find out how they guard your confidential information. Ask about availability of the tax preparer before hiring, since you'll want their time to talk about your tax preparation. Understand that the most reputable preparers will request to look at your receipts and might ask you multiple questions to decide your qualifications for expenses, deductions, and other items. Doing so shows they have your interest in mind and will be able to assist you in avoiding penalties, and interest or additional taxes that could result in an IRS audit. Find out if the preparer is affiliated with a certified organization that offers or requires its members to pursue continuing education and holds them responsible to a code of ethics. Watch out for tax preparers who guarantee you a return refund without ever seeing your economic information. A paid preparer should sign the return as required by law and should also give their ID number. With this information and a little research you should have no problem finding the best person to prepare your taxes.
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