How to Choose a Tax Preparer

You have to file your taxes every year, so you either have to do it yourself or hire someone else to do it for you. Statistics show that about one-half of all individual tax returns filed are self-prepared. With the excellent and inexpensive software available today, self-preparation may often be the cheapest and easiest way to get the job done. If your return is reasonably simple and you are confident in your ability to read and follow instructions, you will probably achieve similar results as you would with a professional tax preparer. If you self-prepare, you could ask a professional for a quick and inexpensive review of your completed return to be sure you didn't miss something really important. Some clients ask us to review their self-prepared returns every three years. In this way, any errors discovered may be corrected by filing an amended return within the 3-year statute of limitations.

Of course, being in the Tax Preparation business, we believe that most taxpayers can benefit from using a professional preparer. You may choose to use a professional preparer because your return is too challenging for you, because you want the extra protection in dealing with the IRS, or you just want to save the time. Whatever the reason, here are our recommendations for selecting a tax preparer:

Ask friends and colleagues for referrals

Ask a lot of people. Don't just take the first name that comes along. Consider carefully the credibility of the person making the recommendation. Seek out the opinion of people whom you respect and trust. This might mean that you go beyond your circle of friends if they are not sophisticated about money. Do you have an uncle or business associate who seems to be good with money? How about your banker, your doctor, or your employer? Ask questions about their tax preparer and listen closely to the answers. A referral should be positive and backed up with a good reason. "I go to them because they do my father's taxes" is not really a referral. Keep getting referrals until someone's name starts popping up over and over. Then you've found someone local who is really doing a good job.

Interview your preparer

Have some questions ready to ask. How long have you been in practice? How many clients do you have? How large is your staff? What is your turn-around time? What is your educational background? How much additional training do you get every year? How many audits have you been to and what were the results? And most importantly, what are your fees and when is payment due? Look for honest and forthcoming answers to your questions. If you get the sense that anything is being held back, you might be right. Get a feel for how well you will be able to work with this person. You, the customer, are entitled to patience, courtesy, and respect.

Check references

Ask for references and call them. In particular, ask for names of people who have been audited, so you can see how capably they have been defended. The preparer should call the clients to ask their permission before allowing you to contact them. If he does not, he may have violated their confidentiality and he may violate yours. You should expect all the references to have a glowing opinion, since the preparer picked them himself.

Get a written quote for the fee

Fees vary widely from preparer to preparer and from town to town, and most preparers are reluctant to publish their fee schedules. Ask around and establish a range of fees paid by friends and colleagues with similar tax issues as yours. If your preparer falls within the range, the fee is probably reasonable. If it is low, you may wonder if the preparer is qualified. If the fee is high, ask what special qualities or services the preparer offers to justify the fees.

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