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Questions to ask your tax preparer
By Larry
Getlen • Bankrate.com
Whichever type of tax professional you choose, here is
some important information to assess. It's important to get satisfactory
answers to these questions, because regardless of who fills out your
1040, when you sign it, you become legally
responsible for what's entered on it.
- Experience:
How many years have they been in business? Smaller operators may
have fewer years in the trenches than you would be comfortable
with.
- Credentials:
Different states have different requirements, but since the business
is largely unregulated, extra credentials help inspire confidence.
Is your tax preparer a CPA? Do they have any other professional
affiliations, or membership in organizations such as the Better
Business Bureau or the local Chamber of Commerce? Have they taught
taxation, perhaps at a reputable school? All of these factors
could make you more comfortable with your decision.
- Focus: Some
tax professionals specialize in areas such as real estate or small
business, and every industry has specialized needs or categories
for deductions. Does the focus of their practice include knowledge
of your industry? Are they familiar with your industry's specific
requirements? Find out what percentage of their business has been
in a field related to yours.
- Continuing Education:
There could be as many as 500 to 1,000 changes to the tax code
every year, so all tax professionals need to keep themselves current.
Find out how they stay updated as to changes in the law.
- Regional Familiarity: If you do business in states other than your home state, make
sure the tax preparer understands the laws of that state.
- Professional Style: Some preparers are conservative, always opting on the side
of caution, and others are more willing to take the judgment call.
The former will provide smaller refunds but less chance of audit;
the latter will increase your deductions and therefore your refund,
but may also increase your chance of having to face the IRS. The
ideal preparer is probably somewhere in the middle, but if your
preparer's philosophy is significantly different from your own,
you could end up frustrated at what you feel is an larger-than
necessary tax burden, or, on the other side, a risky return. Make
sure the preparer's philosophy coincides with yours.
- Availability: All tax preparers work until April 15. But what if there's
a question on the 17th? Or, worse yet, a call from the IRS in
July? Make sure the preparer will be available for assistance
year round. The IRS doesn't take summers off.
- Cost: If your
taxes are simple, H&R Block's inexpensive service may do just
fine. But if your tax situation is more complex, a few dollars
spent now may save you many dollars down the line.
- Verification Methodology: What safeguards do they have in place to check for accuracy?
Do they have a qualified partner who double-checks returns for
mistakes?
What to avoid
There are several red flags when speaking to
a tax preparer. If you sense any of these situations exist, run.
- If a preparer tries to set your fee depending
on the amount of your return. That's a no-no. The can, however,
charge according to the complexity of your return. In that case,
they should be able to give at least a rough estimate of charges
in advance. Don't be afraid to ask what their fees are based on.
- If they guarantee you a refund before even
learning of your specific tax situation.
- If they refuse to sign your return, which
they are required by law to do.
Following these suggestions should help you
to maximize your deductions, and ease the headaches so often associated
with this time of year.
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