Friday Four: Selecting a Tax Preparer

Recently I hosted a Turbo Tax Party. I was able to offer discount codes, tax tips , a spiffy -information infused folder and a healthy snack. It was a pretty nice HouseParty*.  Because we had friends and family out of town that wanted the information, we did a Periscope and created an online party on FaceBook. (You can still join in for great tips and tax jokes) Whether you use a family friend/non certified or a CPA, Enrolled agent, etc., you should know what to look for.

EA is a tax professional licensed by the IRS through a special enrollment exam or after working for the IRS for five years.They’re required to take continuing education courses in taxes every three years, and, generally speaking, may charge less than CPAs.

There are several good signs for a good tax preparer, but not many for a bad one. For example, Good tax preparers will ask for all your W-2, 1099 and 1098 forms as well as other records and receipts to verify income, expenses and credits.  Preparers who are willing to e-file returns using paystubs in place of W-2s are in direct violation of IRS rules and regulations. Did you know that? Well here’s 4 more tips to use to keep you from being audited.

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  1. Ask The Big Question                                                                                                                Ask for referrals. Easy one right, but you’d be surprise at the number of people that don’t do that. Some of the biggest brands in the industry have shaky branch offices and preparers.  So don’t let the name and office space fool you.

Note that you don’t have to go to a tax preparer’s office to do your return. Tax return preparation can be handled completely online by email. There are no laws preventing you from using an accountant online. Thus, you can use a preparer in another city or even another state.

2. They Do NOT have to be licensed.                                                                                                           “The court ruled that Congress never gave the IRS the authority to license tax preparers, and the IRS can’t give itself that power.”Only a few states – such as California, Oregon, Maryland and New York – have licensing or registration requirements for paid tax preparers. In all other states, practically anyone can prepare your federal tax return and charge a fee. See theRegistered Tax Return Preparers (RTRP) program required preparers to obtain a Preparer Tax Identification Number (PTIN), pass a competency test, pay an annual application fee, and complete fifteen hours of continuing education annually. Not everyone wants or must do that. It doesn’t automatically rule them as incompetent, scammers or, out right abusers.

3.Client Security

Unfortunately, the tax preparer industry has not remained immune from the ever-increasing problem of security breaches.  Never hesitate to ask a preparer how they safeguard client confidentiality in the form of physical and electronic security of their clients’ information and records.  If the answer is not to your satisfaction then walk away.
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4.PTINS and E-filing

A paid preparer must have a Preparer Tax Identification Number (PTIN) and if they prepare and file more than 10 returns for clients they must file electronically.  The client copy of the tax return should show the preparer’s name and PTIN in the signature area of page two of the Form 1040.  Never agree to do business with a tax preparer who refuses to provide their clients with copies of their tax returns.

audit w2

Look for someone with at least seven years’ experience. You want someone who’s handled a variety of tax situations, in both good and bad economic times.

Often, the best way to find a tax pro is to get referrals from friends or business associates. If this doesn’t work, there are a number of professional organizations that have online databases of tax preparers.


Oh, and please don’t overlook this IRS page and this one.too!

The reality is, taxes can be hard, and it’s getting harder. The Tax Code is becoming increasingly complicated. And tax preparers make it easier to navigate. Tax time alone can be a stressful. That’s why many taxpayers hire someone to do their taxes for them. It’s important to choose the right preparer, otherwise you may find yourself in the precise legal trouble you were trying to avoid in the first place!

Keep It Right- Keep It Tight!


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