Updated: Oct 26, 2021
Taxes are inevitable. We all have to submit tax returns each year. However, having your taxes prepared can be stressful. The IRS has strict requirements, so it's always good to have an expert familiar with the rules to prepare your taxes. A well-versed tax preparer can help you avoid mistakes. They will also help you to identify tax exemptions, credits, and deductions.
You want to ensure that you hire a professional who will do right by you. But the process of selecting the right tax preparer can be overwhelming. Given how complex and confusing tax laws can be, it's no easy feat to determine who has the qualifications and experience to provide you with the best results. Hiring a tax professional? Here are 12 questions you should be asking them:
1. What are your credentials?
A tax preparer can be an enrolled agent, CPA, attorney, and other professionals grouped as certified and noncertified. Your enrolled agents, CPAs, and attorneys have unlimited representation rights. This means they can contact and work with the IRS on your behalf.
2. What is your PTIN (Preparer Tax Identification Number?
The IRS requires anyone who receives payment for preparing federal tax returns to have a PTIN. To professionally manage your taxes, this eight-digit number is a requirement. All enrolled agents, CPAs, attorneys, and other professionals renew their PTIN annually. If a tax preparer does not have a PTIN, reconsider using another tax professional.
3. How long have you been preparing returns?
An experienced tax preparer has a greater chance of completing your taxes with little to no mistakes. Look for someone who understands your industry and business situation. If they are new to tax preparation, ensure there is another tax professional who oversees their work.
4. Have you prepared (xx) tax returns before?
All tax returns are not the same. You and your competitors can have different tax returns. Ask the tax preparer if they specialize in a particular tax form and schedules. Make sure they have experience with your specific situation.
5. Do you know the requirements of the states and local agencies where I am required to file?
Each state has different filing and tax requirements. If your business operates across state lines, you will need special guidance. Ensure the tax preparer knows what state exemptions you qualify for and tax laws that affect your business.
6. How do you determine your fees?
A tax professional should give a range of how much you should pay for a tax return. Some tax preparers charge based on the type of tax forms you will have to file. A clearly explained fee structure needs to be in writing.
7. Who will sign my return?
All tax preparers should sign the tax return. The PTIN and the preparer's signature should appear on the tax return. Do not trust someone who wants you to sign or isn't upfront about who will sign your tax returns.
8. When will I receive a copy of my return?
You should receive a complete tax return with the forms and schedules within a reasonable timeframe. After you provide the documents to prepare the tax returns, the tax preparer should update you on the status of your taxes throughout the process.
9. Once tax season is over, can I call you if I have a question or problem?
Once you receive your completed tax return, know how to contact the tax preparer throughout the year for ongoing tax questions. Ask what method of communication is best during nontax season.
10. What happens if I get audited?
Find out how the tax preparer handles IRS audits. Will they respond to the questions? Will they manage the communication between you and the IRS? What are the fees for managing the audit? You want to understand this upfront so you will not be surprised.
11. What documents will you need from me?
A qualified tax preparer should insist you provide the forms such as W-2, 1099, and other documentation to support income and expenses to prepare an accurate tax return. If they are not asking for records, this is a red flag for you to reconsider getting a new tax preparer.
12. What does your tax preparation process look like?
The process should include a tax preparation checklist and internal reviews to ensure the tax return is accurate. They're equipped and organized with tools to prepare your tax return. There needs to be an initial interview where the tax preparer reviews the checklist and asks questions about your financial situation. Some may offer a follow-up meeting before filing the tax return.
Your ideal tax preparer should answer all your questions with honesty and patience. They take time to get to know you and your financial situation so they can help you file your taxes. In the long run, it pays to take your time to find a tax expert who can be a trusted partner over time.
If you need a BIPOC tax preparer, check out Accountants of Color for a directory of CPAs and tax preparers.
Linda Diakite Karressy, is the founder of Insight Financial Group, makes accounting fun! She isn’t your stereotypical zero-personality accountant who wears the traditional green shade. She loves breaking down accounting to its lowest denominator so that everyone can grasp it. To keep up with Insight Financial Group, you can follow them on all socials under @insightfinancialgrp.