By: Loraine E. García, MBA, EA
Many of us need to hire a tax preparer, either because we do not have time to prepare taxes ourselves or simply because we do not have the necessary knowledge. But how do we select this person with whom we are going to share our most sensitive information? What questions should we ask?
Here are some tips that you can follow so that you can choose the preparer that meets your needs and keep your eyes open to inappropriate practices:
· The preparer must have a PTIN (Preparer Tax Identification Number)
The PTIN or preparer number is assigned and required by the IRS for anyone who prepares taxes for compensation. If your tax return does not contain this number, this is a sign that the person is not a legitimate preparer.
· Avoid those preparers who send your return on paper
The IRS requires everyone to file their tax return electronically. There are only a few exceptions to this rule, and these include that your return was rejected for identity theft (yours or one of your dependents). If your preparer does not offer electronic filing, the person is not duly registered.
· Be careful with those who use personal return preparation programs
There are some preparers who create an account for you in one of these programs to do your return for yourself such as TurboTax, TaxSlayer, TaxAct, etc. Although they offer you "electronic filing", what they do not explain is that they are filing in your name, just as if you were filing it yourself, without any intervention. This prevents them from entering their credentials or virtually signing the tax return.
· A legitimate preparer always signs your returns
If you are paying for this service, require your preparer's signature. When you sign your tax return, you sign under penalty of perjury that everything stated there is correct, true, and complete. If your preparer does not sign it and then there is something to claim later, you will have no one to claim from, because in the eyes of the IRS, you are solely responsible.
· Verify credentials and education
The PTIN is an easy thing to get, however other credentials and education are not. CPA and EA (Certified Public Accountant and Enrolled Agent) are the most common credentials when it comes to taxes, but if your preparer does not have them, at least verify that they have relevant education and maintain their knowledge in the field through continuing education.
· Don't trust a preparer who doesn't ask questions
A good preparer always asks questions. There is no other way to prepare a correct and accurate tax return. If they just take your papers and don't ask any questions, this is a red flag.·
· Avoid preparers that charge a percentage of your refund
Rates must be structured by the hour or by the difficulty of the schedules, never based on the amount of the refund you are going to receive.
· Ask their field of expertise
Some preparers are versatile and may have experience in different areas, but others are specialized in specific areas. Are you in the military? Look for one who has experience and knowledge working with the military. Do you have your own business? You should look for someone who knows how to work with small businesses.
· Look for their availability
Is your preparer only available during tax season? This is something that is preferable to avoid. Choose one who can assist you throughout the year if necessary.
Choosing the appropriate preparer is extremely important. Keep in perspective that one bad decision can cost you thousands of dollars. It can also cause an audit in which your assets, whether personal or business, will be put at risk. Remember that this is the person to whom you will be entrusting your most confidential information. Find someone with whom you can establish a trusting professional relationship and who has no qualms about answering your questions. Avoid ghost preparers who will put your personal information and finances at risk and if you do come across one of them, use the form 14157 or 14157-A to report them to the IRS.