How Can I Find A Good Tax Preparer?

In most states, anyone can call themselves a tax preparer. With consumer tax software costing as little as $19, the field has become flooded with people who generally know little more than the people for whom they are preparing returns ... sometimes less.

One excellent way you can find a good preparer is to ask your friends and associates, whose tax situation is likely to be of similar complexity to yours, whom they use and are happy with.

Another way to find a tax professional is to check your local phone book for a state society of CPAs, EAs, or the local bar association for attorney's with a tax-oriented practice.

Certified Public Accountants (CPAs) are licensed by the state to provide public accounting services. They have demonstrated their ability to do this by passing a rather difficult three day test, and by maintaining their skills with annual continuing education. However, be aware that not all CPAs are tax experts. Indeed, some may be in private industry, or specialize in other areas of public practice (such as auditing or litigation support) in which they do not need to maintain their knowledge of taxes. However, most CPAs who work in public accounting firms, and hold themselves out to do tax returns, do keep current on taxes, and are an excellent choice for a tax preparer, especially for large or publicly traded companies, or complicated tax matters such as those involving international taxation.

Enrolled Agents (EAs) are licensed by the Internal Revenue Service to represent taxpayers in audit situations (as do CPAs and attorneys). Their licensure is achieved by either passing a two day exam on tax law and ethics, or by working for the IRS in a compliance capacity for a number of years. EAs are required to document their continuing education, which must specifically be in the field of taxation. Some EAs do accounting as well, and some do not.

Attorneys had to study tax law in order to pass the bar exam, but only a small percentage provide tax preparation services on an ongoing basis. An attorney is also the only tax professional who enjoys client-attorney privilege under most laws, meaning that your conversations with them generally can not be forced to be revealed in a court of law.

Some states license tax preparers, but may allow unlicensed preparers to practice as well. While there is no guarantee that a licensed preparer is any more knowledgeable than an unlicensed one, licensure does give you some reassurance that there is some outside government entity monitoring the person's performance.

Note that many tax preparer groups provide "titles" for their members, which may be based on experience or education, or simply because the tax preparer sent them a check and ordered the certificate. Be wary of any "titles" other than attorney, CPA or EA, as they provide no real assurance of competence in taxation.

Tax laws are complicated, and constantly changing. Therefore, consider that someone who does taxes "on the side" or seasonally is not as likely to be as knowledgeable or experienced as someone who does this full time, year round.

If money is tight, consider that attorneys, CPAs, EAs and licensed preparers may charge higher rates than store-front tax offices and unlicensed preparers. And there is no real guarantee that they are that much more knowledgeable than the unlicensed preparer who does returns on their kitchen table.

Don't buy more "tax professional" than you need. If you have a simple, straightforward return, such as a long form with itemized deductions, it's likely the storefront operations or unlicensed preparers can do a good job for you, at a fair price. However, if your tax situation is complicated, a less experienced or knowledgeable preparer could overlook valuable deductions, or make errors in preparing the returns, which could - in the long run - cost you more than if you went to a qualified professional to begin with.

Keep in mind that, regardless of whether you hire someone to prepare your tax return, YOU are the only one that the Internal Revenue Service considers responsible for its content.

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