How To Find The Right Tax Professional For Your Needs

January 04, 2024

There are lots of reasons to consider outsourcing the preparation of your income taxes to a pro, whether you just don’t want to take the time anymore or you have a more complicated situation such as income sourced from multiple states, income from your side gig or just want to make sure you’re taking advantage of any and all tax savings opportunities. It’s important to know that all tax preparers are not the same – there are different credentials and specialties within the world of tax preparation.

The first step in finding a pro is determining what type of preparer you need. Here are the 5 categories to choose from.

The type of preparer you need depends on your situation

Paid tax preparer:

For a routine return (aka you’re married with kids, own a home and have donations and maybe some investment income, but nothing more complicated), a tax preparer from a storefront service like H&R Block or Jackson Hewitt could do the trick. The convenience of extended hours and immediate tax preparation along with the relatively low cost (starting at about $60 on up, depending on the complexity of your return) is what attracts most customers. While most paid tax preparers must pass employer-administered examinations, they may not be as rigorous as those required to gain the designations or certifications other pros hold.

Also keep in mind that anyone can call themselves a tax preparer as long as they have an IRS issued preparer tax identification number (PTIN), but that doesn’t necessarily mean they know what they’re doing. If you’re looking to hire a tax preparer that doesn’t work for a large service, be sure to ask about experience and other credentials. And beware of any preparer asking you to sign a blank tax return or promising you any type of refund guarantee before looking at your information – they’re most likely up to no good and you’re always on the hook for taxes you owe, no matter who prepares your return.

Accountant:

Someone who practices accounting but hasn’t taken or passed the CPA examination may not be a bad choice for a basic return. Seek someone with a personal tax emphasis. Rates can range from $40 to $75 or more per hour.

Enrolled Agent:

EAs are the only taxpayer representatives who receive their right to practice from the United States government. (CPAs and attorneys are licensed by the states.) Agents have either worked for the IRS for five continuous years or have passed a two-day exam, and must complete 72 hours of continuing education every 3 years. Billing may be hourly (usually $100 to $200 per hour) or by the tax return, which can run from $100 (for a basic 1040) on up depending on the complexity. You may choose to work with an EA if you have an unusual tax situation or have past tax issues that you need help cleaning up.

Certified Public Accountant:

A CPA earns the title by passing the Uniform CPA examination, a rigorous 4-part test that ensures those holding the license are knowledgeable in all areas of accounting. CPAs must also complete a certain amount of on-the-job training in auditing and taxes (the amount varies by state) before they can earn their license and then must maintain their license with a certain amount of continuing education each year (varies by state ). Some CPAs specialize in corporate work and may not be the best choice for personal taxes, while others specialize in tax, but not in individual income taxes. A CPA may be the best choice if you have business income, own rental property or have other tax complexities that extend beyond income you earned from working and/or investing.

Tax Attorney:

If your tax situation is very complex or you are in deep trouble with the IRS, you may want to consider a tax attorney. Of course, a tax attorney is the most expensive of the tax pros, with rates typically running from $150 to $600 an hour.

How to find the best one for you

The best place to start your search for a tax pro is with friends and colleagues or even your local chamber of commerce. You can also check with the National Association of Tax Professionals, which has listings with certifications noted. The Better Business Bureau or the pros certifying agency can tell you if the person you’re considering hiring is in good standing, with no disciplinary actions.

Interviewing a preparer before you hand over your W-2 can prevent problems later. Make sure you’re comfortable with their answers to these questions.

  • What’s your education and experience? (at minimum they should have a college degree or several years of experience with references available)
  • Are you licensed or registered? By what agency? For how long? (If they are not licensed or registered, ask to talk with other clients to make sure they know what they’re doing)
  • What’s your specialty (personal taxes, corporate taxes, audit issues)?
  • What continuing education courses have you taken recently?
  • Who from your office would work on my taxes? (many larger offices have interns prepare returns that are then reviewed by more experienced CPAs – if that’s the case, you may be better off going to a smaller office and paying less)
  • In the event I’m audited, could you represent me?
  • What are your rates, and how much do you expect the total cost of the return to be? (beware of anyone wanting to charge by the form – you could be overcharged. The best preparers either charge by the hour or are willing to give you a not-to-exceed estimate)
  • When would the return be finished? (if you’re coming to them after mid-March, don’t be surprised if the answer is after the filing deadline – busy tax preparers often file extensions for clients who procrastinate getting their information in on time, although that doesn’t extend your time to pay any taxes due)

Whatever your needs, there’s a tax pro out there ready to make your life easier. Choose the right one, and you’ll more than likely get your money’s worth.