Looking for a Reliable Tax Pro? We’ve Got Tips to Help

Preparing your own tax return can be terrifying. Not only might you have to decipher complicated tax rules, but you’re constantly worrying about using the wrong form, missing a valuable tax deduction, or triggering an audit. Who needs the extra stress? If the thought of doing your own taxes keeps you up at night, it’s better to just hire a tax preparer to file your return this year. But that comes with its own set of scary problems. After all, you’ll be handing over your Social Security number and a year’s worth of sensitive financial information to a stranger. So, you need to make sure that person is honest, dependable, and competent. Otherwise, you could be back where you started—worrying about tax forms, missed deductions, audits … and now identity theft, too. If that concerns you (it should!), here are a few stress-free tips for finding a reliable tax preparer. It might take a little bit of time and effort to discover the right person, but it will be well worth it in the long run. Not only will you end up with a solid tax return, but you’ll sleep much better this tax season.

Tips for Finding a Reliable Tax Preparer

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When you’re looking to start a search for a reliable tax preparer, there are several steps you can take to get ahead of the game and find competent options to handle your taxes. Next, we offer actionable tips for finding someone that meets your tax filing needs.

1. Start Early

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We all know that the early bird gets the worm. That applies to finding a tax preparer, too. The best tax professionals will be booked up quickly. So, if you don’t want to get stuck with a sub-par preparer, start your search as soon as you can—like now! If you procrastinate too long, you might not be able to find someone at the last minute who can handle your return. This year, federal income tax returns are due on April 15 for most people (April 17 for residents of Maine and Massachusetts). So, if you waltz into a tax preparer’s office in late March or early April, don’t be surprised if they turn you away. WealthUp Tip: If you can’t find a tax preparer before the April 15 deadline, you can get an automatic six-month extension to file your federal income tax return. However, a tax filing extension doesn’t push back the due date for paying whatever tax is due.  You must estimate that amount and send a payment to the IRS by April 15.

2. Focus on Credentialed Preparers

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Anyone can offer tax preparation services … but you don’t want just anyone. If it were my tax return, I wouldn’t trust anyone who isn’t credentialed. That’s the best way to know if a tax preparer possesses at least a minimum amount of tax knowledge and isn’t some fly-by-night huckster. So, what types of credentials should you look for? When it comes to tax professionals, the three most common types of credentialed tax preparers you’ll encounter are certified public accountants (CPAs), enrolled agents, and tax attorneys. Let’s take a quick look at each of these. Like WealthUp’s Content? Be sure to follow us.

A. Certified Public Accountants (CPAs)

There are many steps to becoming a CPA. Someone who wants to be a CPA must first earn a bachelor’s degree (with a certain number of accounting-related credits). CPAs often have a graduate degree as well. CPA candidates must then pass a difficult four-part exam. If they pass the exam, they must then obtain a license from their state. In some states, a year of professional experience is required before a license will be granted. To verify that a CPA is licensed, contact the Board of Accountancy for the state where he or she is practicing. Once licensed, CPAs must take continuing education classes to stay up-to-date on tax and other requirements. Ongoing professional ethics classes are typically required, too. Thanks to the rigorous requirements, CPAs are generally well-equipped to handle complex tax returns and provide in-depth financial advice. Related: 2024 Tax Calendar (Due Dates for the Entire Year)

B. Enrolled Agents

An enrolled agent is actually credentialed by the IRS. You generally have to pass a three-part test on individual and business taxes to become an enrolled agent. However, certain former IRS employees can bypass the test and become an enrolled agent based on their past experience with the IRS. Enrolled agents must be recertified every three years. Taking continuing education classes (some of which must cover ethics) is required as part of the recertification process. In addition to preparing tax returns, enrolled agents can represent taxpayers in disputes before the IRS (e.g., audits and administrative appeals). They’re generally regarded as experts in tax preparation and planning. To verify whether someone is an enrolled agent, email the IRS at epp@irs.gov. Include the enrolled agents first and last name and, if known, his or her complete address and enrolled agent number. Related: You Might Need a Tax Pro If…16 Times it Makes Sense

C. Tax Attorneys

Attorneys must first get an undergraduate degree and then make it through three years of law school. Some also have an advanced law degree in taxation or some other legal field (an LL.M. degree). After law school, attorneys must pass their state’s bar exam. Once they pass the bar, they must also be licensed by their state, state court system, or state bar association. Because of their specialized training, tax attorneys are ideal for providing legal advice on complex tax matters. They can also represent clients in court. Like CPAs and enrolled agents, attorneys are subject to continuing education requirements. Ethics courses must generally be taken as part of that requirement. Check with the state bar association where you live to confirm that any tax attorney you’re thinking about hiring is licensed and in good standing. Related: 10 “Most Serious” IRS Problems Taxpayers Face

How to Find a CPA, Enrolled Agent, or Tax Attorney

There are several ways to find a CPA, enrolled agent, or tax attorney in your area. You can ask around to see who other people you know use to prepare their tax returns. You can also check the yellow pages … if you still have a phone book at home. If you’re not old enough to know what the “yellow pages” are, just search online for “tax preparers near me.” However, a better method is to search the IRS’s online directory of credentialed federal income tax return preparers. There are other, more trusted resources for finding credentialed preparers, such as the American Institute of Certified Public Accountants’ “Find a CPA” tool. Many state and local CPA societies and bar associations have referral services, too. Related: IRS Erases $1 Billion In Back Tax Penalties

3. Check a Tax Preparer’s Reputation

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In addition to checking on credentials, you also want to get a sense of a tax preparer’s professional reputation. Your first step might be to ask close friends and family members if they have used the services of a trustworthy tax professional. If you get a recommendation for someone who is credentialed, then that could be reason to dig a little deeper. If you’re considering a CPA, check with your state’s CPA society or association to see if any disciplinary action has been taken against him or her. For tax attorneys, contact the state bar association. The IRS also keeps its own list of disciplined CPAs, tax attorneys, and enrolled agents on its website. Another popular resource for checking on a tax preparer’s reputation is the Better Business Bureau. The BBB provides a letter grade rating for more than 5.4 million companies nationwide (A+ is best, F is the worst). The rating measures the business’s responsiveness to customers based on complaints filed with the BBB. Related: States That Tax Social Security Benefits

4. Ask About the Fees

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Make sure you ask about fees up front. Tax preparers rarely have a flat fee that applies to everyone. How much it will cost to prepare your tax return can depend on the complexity of the return, the preparer’s experience, or various other factors. If you can’t get an exact quote, at least make sure you understand the overall pricing structure. For instance, will you be charged based on the number or types of tax forms and schedules needed? Or will you simply be charged an hourly rate for the time it takes to complete your return? Also make sure you understand what’s included in any quoted price. For example, is your state tax return included? Check to see if there’s an additional fee to electronically file your return (which is better than filing a paper return in most cases). See if your tax preparer will charge you extra for audit support if the IRS questions something on your return. Related: 11 Education Tax Credits and Deductions

5. Watch Out for “Red Flags”

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You absolutely want to watch out for certain things when searching for or working with a tax preparer. If you run across one of the following “red flags,” cut off contact with the prospective preparer right away: — Fees are based on a percentage of your tax refund. — Fees must be paid in cash and no receipt is provided. — The preparer promises a higher tax refund than you would get with other preparers. — You’re not asked to provide W-2 forms or other documents needed to calculate income, deductions, or credits (e.g., only a paycheck is required). — The preparer wants copies of your tax documents before agreeing to handle your return. — You’re not able to review your tax return before it’s filed. — You’re asked to sign a blank or partially completed tax return. — Your tax return is filled out in pencil, not pen. — The preparer won’t sign your tax return. — The preparer won’t include a Preparer Tax Identification Number (PTIN) on your tax return. These are signs of a dishonest preparer. There are plenty of credible and trustworthy tax professionals out there, so there’s no reason to do business with someone who suggests one of these questionable practices. Run for the hills immediately! Related: Child Tax Credit FAQs (What Every Parent Needs to Know)

Final Thought on Reporting Dishonest Tax Preparers

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Although not a “tip” for finding a tax preparer, it’s important to note that you shouldn’t be afraid to report any dishonest activity to the IRS and/or the appropriate state licensing agency If you run across a problem after you’ve hired a tax preparer. If improper behavior isn’t reported and dealt with, it will continue. To file a complaint with the IRS, use Form 14157 and/or Form 14157-A. Check with the state licensing agency where you live to learn how to file a complaint against a CPA or tax attorney. Like WealthUp’s Content? Be sure to follow us.

What Tax Bracket Are You In?

Perhaps the best way to lower your federal income tax bill is push yourself down into a lower tax bracket to reduce your tax rate. On the flip side, you certainly want to avoid getting kicked into a higher bracket and increasing your tax rate. But, of course, under either scenario you need to have a good feel for where you are right now. For that purpose, check out the federal tax brackets and rates that will apply for your next federal tax return.  

What’s Your Standard Deduction?

For most people, their largest and most important tax deduction is the standard deduction. However, the standard deduction amounts change every year to account for inflation. Plus, the standard deduction isn’t the same for everyone. So, before start your tax return or jumping into tax planning mode, you’ll need to know how much your standard will be for the tax year.  

Capital Gains Tax: What You Need to Know

Millions of Americans sell stocks, bonds, cryptocurrency, real estate, precious metals, and other types of investment property every year. However, if you sell investments during the year, you might owe capital gains tax on any profits. The good news is that you’ll pay a lower tax rate on capital gains when compared to income taxes on wages, tips, and other “ordinary” income. On the other hand, there are a few landmines to avoid when you sell investment property. Get all the details with our guide to the capital gains tax. Like WealthUp’s Content? Be sure to follow us.