What to consider when selecting a tax preparer

by | Sep 12, 2023

The pressure of accurately preparing and filing tax returns can be overwhelming, especially when faced with complex financial situations. As the tax code grows increasingly complex, the assistance of a qualified tax preparer can make a significant difference in ensuring accurate and timely filings. However, not all tax professionals are created equal, and selecting the right one requires careful consideration. 

Understand the Different Types of Tax Professionals 

When it comes to tax preparation, there are different types of professionals with varying levels and areas of expertise. It’s essential to understand these distinctions to make an informed decision: 

  1. Certified Public Accountant (CPA): CPAs are licensed professionals with comprehensive knowledge of accounting principles and tax laws. They can provide a wide range of services, including tax preparation, tax planning, and auditing. CPAs are regulated by state boards of accountancy and must meet rigorous licensure requirements, including advanced college coursework, internship hours, and successful completion of the CPA exam.
  2. Enrolled Agents (EA): Enrolled Agents are federally licensed tax practitioners well-versed in tax laws and regulations and authorized to represent taxpayers before the Internal Revenue Service (IRS). They can also assist with tax preparation and planning. While the requirements to be an EA aren’t as stringent as those of CPAs and attorneys, they have demonstrated their expertise and good character by passing the EA exam and an IRS background check. 
  3. Tax Attorneys: Tax attorneys are lawyers who specialize in tax law. They can offer legal advice, represent clients in tax disputes, and provide tax planning services. Tax attorneys are particularly beneficial when dealing with complex legal matters or when facing litigation with the IRS. As is the case for any licensed attorney, tax attorneys must hold a post-graduate law degree, pass their state bar examination, and a character and fitness review.

Key factors to consider 

Assessing Qualifications and Experience: 

When evaluating tax preparers, it’s crucial to assess their qualifications and experience. Look for professionals with relevant certifications, such as being a CPA, EA, or tax attorney. Consider their years of experience in tax preparation, especially in handling situations like yours. Experience is valuable when dealing with complex tax codes and regulations. 

Seek Referrals and Checking Credentials: 

Word-of-mouth recommendations from trusted sources can be invaluable in finding a reputable tax preparer. Ask friends, family, or business associates for recommendations based on their positive experiences. Additionally, verify the credentials of potential tax professionals by checking with the appropriate licensing bodies or professional organizations to ensure that they are in good standing and adhere to ethical standards. 

Evaluate Communication and Compatibility: 

Effective communication with your tax preparer is essential for a smooth and stress-free experience. During the selection process, assess their ability to explain complex tax matters clearly and understandably. Consider their responsiveness and accessibility, as prompt communication is vital – especially during tax season. Additionally, ensure that you feel comfortable working with them and that they understand your specific needs and goals. 

Review Fee Structure and Pricing: 

Tax preparers have different fee structures, including hourly rates, flat fees, or fees based on the complexity of your tax return. Discuss pricing and understand what services are included. Avoid selecting a tax preparer solely based on price, as quality and expertise should take precedence over cost. Compare providers to ensure that the fee charged aligns with the complexity of your tax situation and the level of service provided. 

Inquire About E-Filing and Security Measures: 

Verify that the tax preparer offers e-filing, as it simplifies the process, reduces paperwork, and expedites your refund. You should also inquire about the security measures they have in place to protect your sensitive financial information. Data breaches can have severe consequences, so choosing a tax preparer who prioritizes data security is essential. 

To make an informed decision, it is essential to ask the right questions, such as: 

  • Can you provide examples of tax situations like mine that you have successfully handled? 
  • What tax software or tools do you utilize to ensure accuracy and efficiency in the preparation process? 
  • How do you communicate with your clients during the tax preparation process? Are you available for in-person meetings, phone calls, or email correspondence? 
  • What is your policy regarding responding to client inquiries or concerns? How quickly can I expect a response? 
  • Do you offer any additional services beyond tax preparation, such as tax planning or IRS audit representation? 
  • Can you estimate the total cost of preparing my tax return? Are there any additional fees for specific services or complexities? 
  • How do you handle the confidentiality and security of client information? 
  • Do you have professional liability insurance in case of errors or omissions in the tax preparation process? 
  • Are you familiar with the tax laws specific to my state or locality? 
  • Can you explain your process for reviewing and double-checking tax returns before submission to ensure accuracy? 

Considering the stakes, selecting a tax preparer requires careful consideration. Use what you’ve learned here as a guide, but tailor these questions to your specific situation, ask any more that come to mind, and carefully gather the information to make an informed decision. And if there’s anything we can do to help, feel free to talk to one of our experts today.