With a few weeks left before the April 15 tax filing deadline, it’s that dreaded time of year for those who’d rather give the task of preparing their taxes onto someone else.
If you’re one of the 60% of tax filers who plan to hand over your tax affairs to a financial professional, here are four questions you should ask before hiring a tax preparer.
1. What are your credentials?
A CPA (Certified Public Accountant) has studied accounting at a college or university and passed a standardized CPA exam. They also have a certain number of years of public accounting experience as required by their state’s licensing board.
Enrolled Agents (EA) are licensed by the IRS and specifically trained in federal tax planning. They’ve either passed a comprehensive exam or worked at the IRS for at least five years in some capacity in which they’re interpreting or applying the tax code.
Other tax professionals may have taken continuing education courses in accounting. Some attorneys specialize in tax preparation and planning. Attorneys should have earned a law degree and passed a bar exam and should be licensed by their state. The IRS has a searchable database of tax return preparers who hold the professional credentials that it recognizes, including CPAs, EAs, and attorneys on its website.
2. Do you have a PTIN?
All tax preparers are required to have a Preparer Tax Identification Number (PTIN) if they are compensated for preparing or assisting in the preparation of all or almost all of any US federal tax return or claim for a refund. This includes CPAs, enrolled agents, and other tax professionals who are required to state their PTIN on your tax return.
3. How much will it cost?
Professional tax preparation fees can vary widely depending on where you live, how complex your tax situation is, and the amount of time it takes to complete the necessary forms. According to the National Society of Accountants, the average tax preparation fee this year for an accountant is $273 for a standard federal tax return with a Schedule A for itemizing deductions, as well as a state return.
Enrolled agents may cost less, but their fees can also vary widely. Find out ahead of time what your total tax preparation fee will be – most quality tax professionals will be able to provide you with an estimate of fees beforehand.
The IRS warns taxpayers to avoid preparers who base their fee on a percentage of your refund, or those who claim they can obtain larger refunds than other preparers. And always make sure any refund due is sent directly to you or deposited into an account in your name. If a tax preparer suggests another arrangement, look for another preparer.
4. Will you electronically file my tax return?
Most taxpayers e-file their returns, which the IRS says is the fastest way to get your refund, usually in 21 days or less. If you want to make sure your return is filed electronically, go to the IRS website to find out if the tax preparer has been accepted by the IRS electronic filing program and is authorized by the IRS to prepare, transmit, and process electronic returns. Or, you could just ask Williams & Kunkel directly.
Proper tax-planning is the key to cutting back on the amount of taxes you owe both now and in the years ahead. When you work with Williams & Kunkel, CPAs LLP and Scott A Kunkel, CPA PC, you can be sure that we will actively look for ways to minimize your tax liabilities throughout the year, not just when deadlines loom.
I like that you talked about the importance of making sure that the tax preparer that you will hire has Preparer Tax Identification Number (PTIN) which is required for all tax preparers. My father is looking to hire a tax preparer to help him with filing his return. It’s important for him to only hire qualified and licensed professional to ensure the completion of the job correctly. For me, the PTIN of a tax preparer is a proof that he can be trusted. I will make sure to share your blog with my dad so he can consider your tips.