How to Choose the Right Tax Professional

If you think all tax preparers are created equal, Jeffrey Wood wants you to know this: “They are absolutely not.”

Wood is a financial advisor and partner at Lift Financial in South Jordan, Utah, as well as a certified public accountant. But he says that designation doesn’t necessarily mean he’s the best person to prepare tax returns. “I would go for experience over accolades,” he says, noting that while some CPAs specialize in taxes, others do not.

What’s more, some tax professionals prepare returns only in the spring, while others offer more comprehensive services to their clients. Some may help identify areas of potential savings, assist in the event of an audit and even provide year-round guidance and support.

Many people wonder: How do I find a good tax professional near me? To start, follow these steps:

1. Understand your tax preparation needs.

2. Check with your network for referrals.

3. Confirm credentials.

4. Ask for an interview.

5. Compare fees.

6. Look for red flags.

[READ: Tax Prep Checklist: Collect These Forms Before Filing Your Taxes.]

1. Understand Your Tax Preparation Needs

The first step to finding the best tax professional is to identify what services you need. Some people have basic tax returns, while others may require a preparer who can handle complex tax situations and be available for consultation throughout the year.

“For many people, an H&R Block is a good option,” says Benjamin Bohlmann, a Miami-based partner at accounting firm Marcum. Chain tax preparation companies often have low-cost services that meet the needs of taxpayers with simple returns. “They’re fine and do good work, but it’s not a relationship,” Bolhmann says.

Those who want personalized advice or have complex finances may want to look for a CPA. Enrolled agents and some attorneys are also qualified to do this work.

“Different people have different levels of experience,” says Eric Bronnenkant, head of tax for Betterment, an online financial advisory.

Being a CPA is no guarantee that someone is well-suited to manage your taxes. Just as medical professionals specialize, finance professionals do as well. Many CPAs focus primarily on audits, and those who do choose a career in tax may concentrate on a specific area such as individual, commercial or real estate. Likewise, non-CPA tax preparers may have expertise in some types of returns and not others.

2. Check With Your Network for Referrals

Once you understand the scope of service required, it’s time to begin searching. The best way to start is by tapping into your personal network.

“I would ask someone in your industry who they recommend,” Wood says. That can be helpful for finding a tax preparer well-versed in your particular needs.

A trusted attorney or insurance agent may also have connections with experienced tax professionals. This method is more time-consuming than going to a search engine and typing “tax services near me,” but it can help ensure you are matched to a professional who is able to expertly handle your tax returns.

If your network doesn’t have any suitable leads, a web search may be your next best option. “That’s a little more risky because you aren’t sure what you’re going to get,” Bohlmann says. A good place to look for qualified preparers is on your state’s CPA association website, assuming they have a searchable membership directory.

3. Confirm Credentials

At the very least, someone who is being paid to prepare taxes needs a preparer tax identification number, or PTIN, to file taxes with the IRS. Almost anyone can get a PTIN, however, and it’s no guarantee that a preparer is good at their job or offers the services you need.

Preparers found chains such as Jackson Hewitt and Liberty Tax may be able to easily handle simple tax returns. They aren’t necessarily trained, however, to provide in-depth tax guidance.

For more complex returns or for help with tax-minimizing strategies, look for an enrolled agent, CPA or tax attorney. You can check the IRS website to confirm someone’s credentials, Wood says.

[Read: Smart Tax Moves for Freelancers.]

4. Ask for an Interview

You can learn a lot from online reviews, but nothing replaces a personal conversation. This is particularly important if you’re looking for someone to partner with for the long-term.

Tax time is busy, so don’t expect a long conversation if you’re searching for a tax professional in the spring, but ask for a five- to 10-minute phone call at least. Then, get the following information if it is not readily available on their website:

— How do you keep my data secure?

— Do you charge a flat fee per form or an hourly rate?

— How many returns do you complete a year?

— Do you prepare all of the returns or do you have staff that assist?

— How often and by what method do you communicate with clients?

— Do you file returns electronically?

With some exceptions, the IRS requires tax preparers to file electronically if they submit 11 or more returns a year. That means preparers who use paper returns may be doing taxes on a part-time basis — and that could be a sign to keep looking, no matter how impeccable a person’s credentials may be.

In large accounting firms, there may be many employees who could be working on your tax return, from CPAs to junior staff members. “You want to be at the right place within the firm,” Bohlmann says, so be sure you understand how work on your return will be delegated.

Preparers should also have systems in place to protect confidential information. “They should have a secure upload portal to share documents in both directions,” Bronnenkant says. Sending sensitive material via email could put your data at risk.

5. Compare Fees

While you don’t want to select a tax professional based on price alone, it pays to compare quotes from several providers, especially if you’re using a tax preparation service for the first time. Some preparers may charge an hourly rate, but it’s also common for them to base the fees on the forms and schedules that they must file.

The average fee charged by firms for a Form 1040 without itemization was $220 in 2020-2021, according to a fee survey by the National Society of Accountants. With itemization, the average cost rose to $323. Self-employed workers paid an average of $192 to have their Schedule C form prepared.

Individuals with very simple returns, such as income reported on a Form W-2 and no investments, may be able to save money on tax preparation by doing their own filings.

[Read: How to File a Tax Extension.]

6. Look For Red Flags

Not everyone who claims to be a tax preparer is legitimate. The following red flags could mean someone is incompetent at best — or a criminal at worst.

Promises of an amazing return.If it sounds too good to be true, it probably is. Bronnenkant urges caution with anyone making “grandiose promises” of a large tax return, particularly before they have had a chance to look at your specific financial information. Unless your income, family situation or the tax law has changed significantly, your tax refundshould be similar from year to year.

Refusal to sign a return.By law, a preparer must sign the form of any return they complete. “Be careful not to sign returns that a preparer isn’t willing to sign,” Wood says. Don’t include your signature until you see your preparer add their name first.

A temporary office or missing website.While some independent tax preparers work out of their homes, be careful about hiring someone who doesn’t seem to have any permanent business presence. Should you be audited or have a question about your return later, you want to ensure the preparer will be easy to find.

Charging a fee based on your refund.Legitimate tax preparers will charge either an hourly or flat fee for their work. Assessing a charge based on the size of your refund is considered a violation of professional ethics.

A bad feeling.Finally, don’t overlook your intuition. “Like other professionals, it’s about finding someone you trust,” Bronnenkant says. If something about a tax preparer doesn’t feel right, keep looking. For instance, if a preparer doesn’t seem to understand your questions or tax situation, that can be a sure sign they’re not the right person to complete your return.

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How to Choose the Right Tax Professional originally appeared on usnews.com

Update 12/20/22: This story was published at an earlier date and has been updated with new information.

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