It’s tax season, which means you should schedule a meeting with a tax professional to get assistance with completing and submitting your tax return. Nevertheless, not all tax professionals are created equal, and if you’re not careful, some could wind up harming your financially.
Here are the most important things to think about when picking a tax professional to deal with if you’re looking for top-notch tax preparation.
Decide what your tax requirements are first.
It’s crucial to be aware of what you require before working with a tax professional. This may consist of:
Preparation of personal taxes
Preparing business taxes
Taxes on income from rentals
Representation in audits
Sale of a house
Additional difficult tax circumstances
While some of the well-known tax preparation services (like H&R Block) may be sufficient for straightforward personal taxes, more complicated tax requirements can necessitate the assistance of a specialist.
After making a list of everything you require assistance with, you may locate a competent tax professional with knowledge in those areas.
Verify the Tax Professional’s Licensing
Not every tax professional possesses a license. Tax professionals are not required to hold any kind of certification or license, but the IRS does require them to apply for a tax professional’s tax identification number (PTIN).
It is preferable to contact a certified tax professional if you require assistance with anything more complex than a straightforward personal tax return. They must pass multiple exams to become licensed, they are held to a higher standard than unlicensed preparers, and they are also qualified to represent you before the IRS if necessary.
Three different tax professional licenses are available:
Certified Public Accountant (CPA):
CPAs must possess a bachelor’s degree, have passed the four-part CPA exam, and complete continuing education courses annually to maintain their licenses from the state. In some areas, obtaining a CPA license also necessitates having at least a year of professional experience. As a result, CPAs are knowledgeable about tax law and well-versed in accounting.
Enrolled Agents (EAs) are authorized to operate in all 50 states and are directly licensed by the IRS. Applicants must pass the Special Enrollment Examination (SEE), a three-part test offered by the IRS, even though there are no formal educational requirements. Enrolled Agents are excellent choices for both personal and business taxes in any U.S. location because, in contrast to CPAs, they are only focused on tax issues.
Tax lawyers have graduated from law school, aced the LSAT, and passed the state bar examination in the state where they intend to practice. A tax law specialist certification is also offered by some states, albeit it is not necessary. Tax attorneys are a wise choice for more complicated tax problems since they can defend you before the IRS and assist with a wide range of tax law issues.
The IRS database can be searched to locate a qualified expert in your area.
Read More: When Is IRS Accepting Tax Returns 2022? Credits And Deductions Unveiled!
Criteria To Look For A Right Tax Professional
Several Businesses Filing Tax Returns For The First Time Should Seek Professional Advice
Does the tax professional belong to a national organization?
Finding a tax professional who is a member of a national association for tax professionals may also be a good idea, even if working with a licensed tax professional is a great starting point. The majority of these organizations have strict requirements for membership, require adherence to an ethics code, and may even provide extra qualifications.
You can look through the following tax professional organizations to locate a tax professional:
National Association of Tax Professionals
National Association of Enrolled Agents
American Institute of Certified Public Accountants
American Academy of Attorney CPAs
Inquire about fees
While some tax preparation services provide upfront cost transparency, others may surprise you with a hefty bill later on. Before working with your tax professional, it’s crucial to understand their charge structure (which means you need to know what services you require). While some charge set costs for various services, others bill by the hour.
By having the prices in writing and having each component of the service itemized so you know precisely what you are paying for, you may further protect yourself. A percentage of your refund should also not be given to your tax preparer as the IRS forbids this practice.
Verify the Tax Professional’s Capability to Represent You in the Event of an Audit
Although having a tax professional’s tax identification number (PTIN) is the minimal qualification for a tax professional, having this number does not grant the preparer the right to represent you in the event of an audit. The IRS has tight rules about who can manage your audit on your behalf, and it necessitates possessing a professional designation (such as EA, CPA, or tax attorney).
A tax preparer may be qualified to assist in an audit, but it does not guarantee that they will. Ask in advance if the tax firm provides audit support or representation services. You want to know that if the IRS calls, you can depend on them to help!
Avoid tax professionals who engage in these behaviors
There are several warning signs to look out for when hiring a tax preparer, even though it’s crucial to select licensed tax experts who provide fair pricing and are held to a higher standard:
They base their costs on the size of your refund.
This method is unlawful, and the preparer can be exaggerating your return amount to increase their compensation. Also, most of the preparers that do this are unlicensed and unable to assist you if you are audited. Work with no one who uses this price structure.
Promoting large refunds
To the IRS, your tax return should be a thorough and accurate statement of your earnings and outgoings. You might want to steer clear of a tax professional if they guarantee a sizable refund. They might manipulate the rules (or disobey them) to increase your refund only to desert you when the IRS comes after its money.
Resisted signing your tax return.
You shouldn’t employ a tax professional if they say they “will get to it after you sign” or refuse to sign your refund. You should only sign your return once you have a copy that has both the tax preparer’s signature and PTIN on it.
To sum up
Choosing a competent tax professional is crucial since choosing the wrong one could result in a financial loss (or worse, an audit from the IRS). Fortunately, there are some excellent resources available to assist you to locate authorized preparers and stay away from any dubious tax preparation firms.
But keep in mind to have everything in writing and make sure you know exactly what you are paying for before you sign anything.
Read More: 2023 Tax Refund Of IRS: What Should You Expect?