Why and How to Choose a Tax Professional
Taxes are complicated, and they change every year, sometimes multiple times.
Many people tear their hair out preparing their own, and then dread the notices that often follow. You may do one or two returns a year; how many hours must you read publications to catch changes? Professionals do hundreds, and can leverage that research & reading time to your benefit. Pricing varies widely, but professional preparation is probably not as expensive as you fear.
IRS sends 200,000,000+ notices per year, in 1,000 different formats. There are *only* 150,000,000 taxpayers! And IRS is a key player in the health care field; many Affordable Care Act provisions run through tax returns. That’s not to mention the state & local taxing entities, which also have printers & stamps.
OK, so how should you choose a professional? Ask friends or associates for referrals. Many people would happily refer, and professionals love to get friends & family referred; it starts a new relationship well. Or look locally; you want somebody who will be around when you get the notice.
Is s/he credentialed? Look for a CPA or Attorney licensed by the state, or an Enrolled Agent who receives credentialing from IRS. All of them are required to stay current via continuing education of 30-40+ hours a year. These professionals can represent you to resolve issues that arise with taxing agencies. There is no licensing requirement for tax preparers. Some may be highly experienced and some are not; make sure you know.
Are they experienced with the kinds of issues that you present? Small business & rental property, complex investments, children with investment income or other complications require more training & experience.
Ask about current membership in professional tax organizations; they provide support to practitioners and have Codes of Ethics to which members must adhere. There are three main associations for tax specialists, NATP (National Association of Tax Professionals), NAEA (National Association of Enrolled Agents), and NTPI (National Tax Practitioner Institute).
Sometimes the worst part of doing the taxes is organizing. Professionals can often help with tools or recommendations that work for your style & expertise.
Make sure you’re comfortable with the preparer. Tax preparation requires inquiry into financial & household matters that people can be reluctant to share with a stranger. IRS rules prohibit disclosure by professionals, but make sure you feel OK divulging that information to the person you’re interviewing to be your financial advisor.
Don’t be afraid to inquire about pricing. A good professional doesn’t want to waste your time or theirs, and can provide a quote or range for you to compare. Just remember that credentialing & experience matter! (Updated 11/2018)