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Guide To Choosing The Right Tax Professional

If you want to come out ahead at tax time, then choosing the right tax professional is essential.

It is almost time for the Internal Revenue Service (IRS) to begin processing income tax returns. According to US News, just approximately a third of all tax preparers have professional credentials. There are plenty of other preparers that call themselves tax professionals have not demonstrated any real tax competency. They have not passed a background check nor are they bound by any ethical standards. The problem is that you are legally responsible for what the preparer puts on your return, which is why it is essential to find someone that you can trust.

Whether you are an individual or a small business, you want a tax professional who is competent and can handle your particular needs. Here are some things to look for to help you choose a reliable, trustworthy tax professional.  

Ensure They Have a Preparer Tax Identification Number

When searching for a tax professional, the first thing that you should do is ask for their Preparer Tax Identification Number or PTIN. The IRS requires anyone who gets paid for doing taxes for an individual or company to have a PTIN. The IRS also requires that preparers put their PTIN on each return that they do. The only preparers that don’t need a PTIN number are volunteers.

Look For Professional Credentials

When choosing a tax professional, you want to make sure they have the proper credentials. There are several credentials to keep in mind.

  • Enrolled agent (EA) - Enrolled agents have been granted a license by the United States Treasury Department to do taxes. These professionals pass a comprehensive exam that demonstrates that they have in-depth knowledge of both business and individual tax returns. Enrolled agents must also have 72 hours of continuing education.
  • Certified Public Accountant (CPA) - These professionals have a bachelor’s degree in accounting and must have passed a state CPA exam. CPA’s can prepare tax returns but make sure they have a PTIN from the IRS. Click this link to learn the difference between an EA vs. a CPA.
  • Attorneys - Attorneys can also prepare taxes if they have a PTIN. According to Chapter 11 bankruptcy lawyer JLG Lawyers, who also help clients solve tax problems, you should consult with an attorney if you need help resolving complicated tax matters. If your taxes may involve litigation, then you really need a lawyer.

Make Sure They Can Represent You During An Audit

Some people are more likely to get audited than others. If you are one of those persons, then you need to make sure you choose a professional who can represent you during an audit. You are at a higher risk of an audit if you:

  • Report no income - If you own a small business and are reporting an operating loss, then you are at a higher risk of an audit.
  • Make more than $10 million in income - The IRS takes a closer look at people with the most money.
  • File an international return - The IRS looks closely at international returns.

If you fall into the above categories of taxpayers, then you really need to find a professional who can represent you during an audit and that would be either a CPA, an attorney or an enrolled agent. A regular tax preparer won’t be able to help during an audit. If you get audited, then you’ll be on your own.

Do Some Research

Once you do have a tax preparer in mind, do some research on that person. Taxes are very important legal matters. You want to make sure that you are working with an honest, trustworthy professional. The IRS has a directory of Federal Tax Preparers who hold credentials. Make sure your preparer is listed in the directory.

Also, check to make sure your preparer does not have any disciplinary actions against them. If you are using a CPA to do your taxes, then you can check the status of their license through the CPA verify website. To check out an attorney, contact the State Bar Association where he or she practices law. You can verify the status of an enrolled agent on this website from the IRS.

Also, don’t forget to ask for references and check out customer reviews. Just because a tax professional does not have any disciplinary actions doesn’t mean that they provide good service Good reviews can tell you whether or not the accountant will listen and work with you to solve problems.

Ask Questions

If you are not sure about something, ask questions. Maybe you are an expat or a business owner. Don’t be afraid to ask if the preparer has specialized knowledge in preparing taxes for people in similar situations. It is okay to ask “have you filed a tax return before for an expat or a business owner?” Worried about how to find the preparer after the tax season is over? Ask them how to get in touch. Wondering what will happen if you get audited? Simply ask. Bring any and all questions up before you hire the person or firm.

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