The Internal Revenue Service Code is confusing, and the rules and regulations change constantly. That’s why so many citizens hire a tax preparer to help them take care of this important responsibility.
Tax preparers may be enrolled agents, CPAs, attorneys, or registered tax professionals. These individuals take at least 15 hours of continuing professional education annually to maintain their designation.
Before hiring a professional to handle your tax paperwork, ask a few questions.
1. Do you have a Preparer Tax Identification Number and have you registered with the IRS?
Individuals who charge a fee to prepare taxes must register with the Internal Revenue Service and receive a PTIN. Other credentials might be impressive, but they won’t be enough for an accounting professional to legally handle your taxes.
As 2290tax clarifies, anyone who intends to file for many different individuals or entities with different EIN’s is considered a Paid Preparer and needs to be registered with the IRS.
2. What kind of returns do you prepare?
Everyone’s tax return will be different. If you have any out-of-the-ordinary income or outgoings, you need a professional who has experience with your situation. For example:
- Are you self-employed?
- Do you own rental properties?
- Are you an investor?
- Has some of your income come from gambling?
- Are you a student?
3. What fees do you charge?
Tax preparers structure their fees differently, so it’s important to know the method a professional uses before hiring him or her. Some of the ways accountants tally their bills include:
- Billing at an hourly rate
- Charging by the number of schedules and forms in returns
- Using a combination of the two above methods
There is fluctuation in fee scales by region, and CPAs charge more than non-CPAs, so take that into account. Also, to save your tax preparer time and yourself some money, organize your paperwork ahead of time. If your tax pro has to sort through your receipts, it will take more time, which will cost you.
4. Will you back me up in an audit?
Be sure to find out what a tax preparer’s policy is if you get audited. Will you have to face the IRS alone, or will your preparer back you up? For example, will he or she:
- Respond to IRS or state tax agencies if they send letters of inquiry?
- Attend an audit with you?
5. Are you available year-round or just at tax time?
Some tax preparers work 12 months a year, so are available to answer questions or help you with tax planning, while others only work a few months each year. Even if he or she doesn’t prepare taxes year-round, find out if there is a way to contact your tax preparer should the need arise.
The individual who prepares your taxes plays a vital role in your financial well-being. Make sure you choose the right professional to meet your needs.
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