The key, as with hiring any professional, is to ask lots of questions. And not just about how much it’s going to cost. Lots questions also apply when hiring a tax preparer.
Here’s a list of 10 questions you should ask before hiring a tax preparer:
Do you have a PTIN (preparer tax identification number)?
Anyone who prepares federal tax returns for compensation must have a valid 2014 PTIN before preparing returns. Without a PTIN, the preparer is not allowed to prepare your return.
Have you prepared an x type of tax return before?
It’s not uncommon for tax preparers – especially those that have been around for awhile – to have a pretty wide scope of knowledge. But nobody can do it all and don’t trust anyone who tells you otherwise. If you have special circumstances because of your investments, occupation or residency status, find a tax preparer who has experience with your specific situation.
Do you know the requirements of the states and localities where I am required to file?
Your state or locality may have quirky filing requirements, especially for business owners. It can get even more complicated if you’ve moved from state to state during the year or if you live in one state and work in another. You may also need special help if you own a business or real estate in a state outside of your residency or if you are the beneficiary of a trust or estate in another state.
What records and other documentation will you need from me?
While you shouldn’t be expected to bring in the contents of your entire home office, a reputable preparer should insist that you provide your W-2, 1099, 1098 and other verification of income and expenses in order to prepare a proper return.
How do you determine your fees?
Prices may vary based on the complexity of your return, whether you require additional schedules (such as dividend and interest on Schedule B, business information on Schedule C, capital gains and losses on Schedule D and/or rental income and losses on Schedule E); supporting forms (such as those for the child tax credit or additional charitable donation information); or whether your return has “out of the ordinary” line items (like Roth IRA conversions or homebuyer credit repayment). Avoid preparers who base their fee on a percentage of your anticipated refund: they have a financial incentive to encourage inappropriate credits and deductions.
Can I file electronically?
More than 1 billion individual tax returns have been processed since the debut of electronic filing in 1990. It’s the quickest way to get your refund and tends to result in fewer math errors. It may also be required: a paid preparer who prepares and files more than ten client returns must file electronically unless the client opts out.
Who will sign my return?
Remember that your preparer must have a PTIN (see again #1). The PTIN and the preparer’s signature need to appear on your tax return. Don’t trust a preparer who refuses to sign a return. And watch out for any preparer or service who won’t tell you in advance who will actually be preparing the return.
When will I receive a copy of my return?
It’s possible to leave your preparer’s office without a copy of your completed return. However, you should receive a complete copy of your return within a reasonable amount of time following your first appointment. If your preparer can’t offer a window of time to expect the copy, it might mean they have a time management problem.
How do I find you if I have a question or a problem after tax season is over?
Clients often receive requests from taxing authorities for additional information in October or November and can no longer locate their tax preparer. Make sure that you know how to contact the tax preparer after your return has been filed. If your tax preparer won’t be around, consider taking your business elsewhere.
What happens if I get audited?
Nobody wants to think about an audit when filing a return. But you need to ask about it now so that you don’t end up in trouble later. Find out how the tax preparer handles audits or examinations from the IRS.