How to Find a Tax Preparer: What to Look for in a Tax Professional

 Maybe filing your tax return is as simple as reporting your W-2 wages and claiming the standard deduction. Or perhaps it’s more complicated because you sold a rental property, and have large investment gains and losses?  Or you're self-employed and file Schedule C. No matter how simple or complex your return is, if you’re like many filers, you’d rather pay to have someone else prepare your return. 

But if you don’t already know a tax preparer, how do you go about finding someone who is qualified and knows the tax laws, while also weeding out those unreliable preparers that the IRS or the Better Business Bureau is always warning about? There is a better way than searching through the phone book or googling “tax return preparers.” Here are tips for choosing someone qualified to help prepare your return.

Look into credentialed preparers 

Anyone can call themselves a tax preparer. The only requirement to prepare a federal return is that the person has a current IRS preparer tax identification number (PTIN). However, preparers have differing levels of skills, education and expertise. Your best bet is to look for a credentialed preparer, meaning someone vetted by the IRS or a state or regulatory board. 

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The most common type of credentialed preparers are certified public accountants, attorneys and enrolled agents. Most people are familiar with CPAs and lawyers. Enrolled agents are licensed by the IRS and must pass a special exam and complete mandatory continuing education. The IRS also has a voluntary annual filing season program for preparers who are not CPAs, attorneys or enrolled agents, and who agree to complete a certain number of continuing education hours each year. 

 One way to help find a credentialed preparer near you is to use the IRS’s online Directory of Federal Return Preparers. It lists the following tax professionals who have active PTINs: lawyers, CPAs, enrolled agents and people who completed the requirements for the IRS’s voluntary annual filing season program (shown in the directory as AFSP — Record of Completion). The list includes the names and qualifications of each person plus their city, state and zip code, but no contact information.

Do your research 

There are other things you can do in addition to finding out about a preparer’s credentials. Checking a preparer’s history and reputation is a good idea, especially if you are looking into someone who is non-credentialed. The Better Business Bureau rates many paid preparers on a letter system — with A+ as the highest and F as the lowest. If you’re extra diligent, you might want to check with the CPA or attorney licensing regulatory board in your state. To verify whether someone is an enrolled agent, email the IRS a request for enrolled agent status verification to epp@irs.gov.  

Ask the right questions 

Once you think you’ve found a preparer, there are several questions you should ask them. 

• Ask to see their up-to-date credentials.
  If the person isn’t credentialed, inquire about education, experience and what he or she does each year to keep up with the ever-changing tax laws. Most preparers are non-credentialed and still provide outstanding tax services. 
• Ask upfront about the return preparation fee.
  Does the person charge by the hour or by return? Is there a minimum fee with add-ons, depending on the number of schedules needed and the return’s complexity? 
• Review your completed return before signing it.
  If something doesn’t look right, ask questions. If your return claims certain refundable tax credits or head of household filing status, ask whether the preparer has complied with the required due diligence rules.

And if the refund amount looks too good to be true… well, you know the adage. 

Preparers to avoid 

Although most preparers are trustworthy and obey the rules, there is always that subset of people who like to play fast and dirty. Walk away if you see or suspect anything suspicious. Here are examples of egregious preparer misconduct: 

• The preparer bases his or her fee on a percentage of your refund. 
• The preparer asks you to sign a blank return. 
• The preparer wants to file the return without your review. 
• Or the preparer won’t sign the return before filing.
  This last one is a big red flag. The IRS calls these people “ghost preparers” and warns people to stay away from them. All paid preparers must sign their clients’ returns and include a PTIN on the form. 

Sniffing out problem preparers is not an easy task for the IRS, so each year the agency urges taxpayers to report these people. If you believe you are a victim of preparer misconduct, you can use Form 14157 to report them to the IRS. 

Note: This item first appeared in Kiplinger’s Retirement Report, our popular monthly periodical that covers key concerns of affluent older Americans who are retired or preparing for retirement. Subscribe for retirement advice that’s right on the money.

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