How to Find the Right Tax Preparer: BBB’s Helpful Tips for Filing This Year
While many opt to utilize an app or buy tax software to handle their own tax submissions, others look for additional assistance through a tax preparation service or consultant.
When should you seek help with your taxes?
Major life changes, owning a business, or simply missing updates on the constantly evolving tax regulations can make finding a reliable tax preparer a wise decision. Much like you’d hire a professional for roofing work instead of attempting it alone, enlisting a professional for taxes can be just as sensible.
A skilled tax preparer is not only knowledgeable about tax regulations and the filing process, but they can also guide you through deductions, tax credits, and the best options for filing status for married couples.
Moreover, a BBB Accredited tax preparer commits to the BBB standards of honesty, keeping promises, and maintaining transparency. Importantly, they also focus on ensuring the safety of your private information.
However, not all tax preparers possess the same experience or training. Here are some helpful hints to help you find someone trustworthy to manage your finances and confidential data.
First, it’s important to recognize the various types of tax preparers and their qualifications. Although all the categories below are capable of preparing your taxes, only enrolled agents, certified public accountants, and tax attorneys can represent clients before the IRS regarding audits, collection issues, and appeals.
Tax preparers: Many individuals in the U.S. work as tax preparers, with some being full-time and others part-time or seasonal. They must have an active preparer tax identification number (PTIN) issued by the IRS. In addition to the PTIN, regulation of tax preparers occurs at the state level. It’s advisable to consult your state’s tax or revenue department for more information. While most tax preparers are competent, the absence of a national licensing requirement means they might be relying on their own knowledge and experience. Therefore, it’s vital to conduct a thorough interview before hiring a tax preparer.
Enrolled Agent (EA): An EA is a tax preparer qualified by the IRS to represent taxpayers. To become an EA, one must have either relevant prior employment with the IRS or pass a rigorous IRS examination on both personal and business tax returns. Maintaining EA status requires ongoing education in accounting practices and tax laws. EAs can work independently or within a firm and may specialize in certain tax law areas. If your tax situation is complex, an EA could be a suitable choice, but ensure their expertise matches your needs. They can also assist in financial planning and offer strategies to reduce future tax liabilities.
Certified Public Accountants (CPA): CPAs are licensed professionals who pass a state examination. Their proficiency in accounting qualifies them for intricate tax planning and preparation, especially if they have practical experience dealing with tax issues and continue their education on tax law updates. For complicated tax returns, a CPA might be your best option.
Tax attorneys: Tax attorneys advise clients on tax-related legal matters and can represent both individuals and businesses. It’s wise to engage a tax attorney if you wish to legally shield part of your income or require specialized guidance on issues such as municipal bonds or estate planning. Tax attorneys can also represent clients in tax court and prepare necessary legal documentation.
How to select the right tax preparer:
Picking the ideal tax preparer for your needs hinges on the complexity of your tax situation. After determining the qualifications necessary for your preparer, consider the following tips to find someone reliable and skilled:
• Check the credentials of the tax preparer. EAs, CPAs, and tax attorneys can represent clients with the IRS for all issues, while other preparers may assist with forms and basic tax matters but cannot represent you during audits. Don’t hesitate to ask about any qualifications before hiring someone.
• Be cautious of extravagant promises. If a tax preparer guarantees you larger refunds than others, this should raise suspicion. Some preparers may base their fees on your refund amount and could resort to dubious practices. Additionally, be wary of those who propose “refund anticipation loans” as you might forfeit a significant portion of your return in commissions. Always read the fine print!
• Seek referrals from family, friends, and the BBB. One of the best approaches to find a reliable tax preparer is through recommendations from people you know and checking with the Better Business Bureau. Visit BBB.org, and pay close attention to customer reviews and complaint histories. This will give you insight into what to expect.
• Consider their availability. If the IRS detects discrepancies in your tax filings or decides to audit you, will your tax preparer be available to assist you? Make sure to find out if they can be contacted year-round or only during tax season.
• Ask about fees upfront. Before agreeing to any services, carefully review contracts and be clear about the fees charged by the tax preparer. Inquire about additional costs for e-filing state, federal, and local taxes, as well as for unforeseen issues.
• If something doesn’t feel right, look elsewhere. If a tax preparer cannot validate their credentials, has consistently poor reviews, or their business practices appear untrustworthy, it’s best to part ways. Remember, if you hire them, they will be handling your sensitive personal data—which must be protected against dishonest or fraudulent tax preparers.
For further assistance and tips on safeguarding yourself, search online for “BBB 10 Steps to Avoid Scams.” Should you encounter a scam, whether or not you’ve lost money, report it to the BBB’s Scam Tracker at BBB.org/ScamTracker and to the FTC at ReportFraud.ftc.gov. Your experience can help protect others from similar scams.
Jan Diaz is the President/CEO of the Better Business Bureau serving Northern Indiana, covering 23 counties. Reach out to the BBB at 800-552-4631 or visit www.bbb.org.
