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Maybe you've worked with a tax preparer before, but did you ever ask them about their credentials?
Many people don't, even though tax advisors have access to information about your most personal details, including your bank accounts, your marriage, your kids — and your Social Security number.
Aside from vetting a tax preparer, there are some other considerations to keep in mind when looking for tax help. Here are seven tips on how to find the best tax preparer or tax advisor for you.
1. Ask for a Preparer Tax Identification Number (PTIN)
The IRS requires anyone who prepares or assists in preparing federal tax returns for compensation to have a PTIN. Note the phrase “for compensation” — volunteer tax preparers don’t need PTINs. Make sure your income tax preparer puts his or her PTIN number on your return — the IRS requires that, too.
» Find a local tax preparer for free: See who's available to help with your taxes in your area
2. Require a CPA, law license or enrolled agent designation
A PTIN is relatively easy to get, so go a step further and get a credentialed preparer — someone who’s also a CPA, certified public accountant, licensed attorney, EA, enrolled agent, or who has completed the IRS’s Annual Filing Season program. The Accredited Business Accountant/Advisor and Accredited Tax Preparer are examples of programs that help preparers fulfill the Annual Filing Season Program requirement. These credentials all require varying amounts of study, exams and ongoing education.
» MORE: Try our free tax calculator
How do you find the best tax preparer near you with the credentials you want? One way is to search the IRS’s directory. It includes preparers with PTINs and IRS-recognized professional credentials. Volunteer preparers and preparers with just PTINs won’t be in the database.
3. Look for friends in high places
Membership in a professional organization such as the National Association of Tax Professionals, the National Association of Enrolled Agents, the American Institute of Certified Public Accountants, or the American Academy of Attorney CPAs is always a good thing to have in a tax advisor, as most have codes of ethics, professional conduct requirements and various certification programs. If you already work with a financial advisor, their firm may be able to easily connect you with a tax advisor.
» Looking for more help? Compare the best wealth advisors
4. Compare tax advisor fees
How much do tax preparers charge? The average fee for preparing a non-itemized Form 1040 in 2020 was $220, according to the National Society of Accountants. For an itemized form 1040, that fee jumped to $323. Often, tax preparers either charge a minimum fee, plus cost based on the complexity of your return, or they charge a set fee for each form and schedule needed in your return. If you come across a tax preparer whose fee is based on the size of your refund or who says they can get you a bigger refund than the next person, that's a red flag.
5. Reconsider tax advisors who don't e-file
The IRS requires any paid preparer who does more than 10 returns for clients to file electronically via the IRS’s e-file system. If your tax preparer doesn’t offer e-file, it may be a sign the person isn’t doing as much tax prep as you thought.
6. Confirm they'll sign on the dotted line
The law requires paid preparers to sign their clients’ returns and provide their PTINs. Never sign a blank tax return — the preparer could put anything on the return, including their own bank account number so they can steal your refund.
7. Check if your advisor would have your back
Enrolled agents, CPAs and attorneys with PTINs can represent you in front of the IRS on audits, payments and collection issues, and appeals. Preparers who just have PTINs can’t — even if they prepared your return. Preparers who complete the Annual Filing Season Program can represent clients only in limited circumstances.
Availability is also crucial. Even after the filing season is over and your tax return is history, the best tax preparers will take your call, respond to your email, or welcome you for a visit.
If meeting with an advisor in person isn't critical, you may consider getting help online. Many online tax preparers now offer live assistance, so if you do have a question while you're filing, you can get help in real time.
» Need help choosing the right software? Explore the best tax preparation services.
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