Income Tax Talk - Finding a Tax Preparer
by: Annette M. Hall
Did you know that California and Oregon are the only two states in the country, which require tax preparers to actually be licensed? While that fact may give you a feeling of comfort if you live in California or Oregon, in all actuality, it shouldn't.
I am certain the law was written to provide some level of protection for the unsuspecting public, who find filing a yearly tax return a daunting task, you aren't any better off than individuals living in states without such extraneous laws on the books.
H&R Block is the largest company in the nation providing training to potential tax consultants, followed by Jackson Hewitt. I've personally been through the H&R Block tax course three times, each time in a different state. H&R Block only hires preparers who have actually completed their training classes.
While the course generally costs $199.00, I have never paid more than $20.00 to take the course. You see the closer it gets to tax season, the more likely they are to offer drastic discounts in their training course, in order to hire enough preparers to get them through tax season. Not only do they cut the cost but they cut the actual training time, cutting required instruction time from the normal 12-weeks of instruction to a mere 4-weeks.
It's been many years since I've either worked for H&R Block or attended their classes, so I decided to check out their website, their website doesn't offer any prices, so I called and was surprised to find their course is still $199.00. The same price they were charging back in the 1980s, when I first enrolled.
To be fair, I truly enjoyed the classes and learned something new every time I attended. That said, let me assure you that no one who attends just one four-week session is prepared to be a compentent tax preparer. While testing is required, participants earning just 70% or better receive a passing score. Today's tax software helps but in no way makes up for solid tax knowledge.
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If you have been visiting the same tax preparer for many years, don't get too
comfortable, unless you are confident
they are keeping up with the current tax laws. Tax law can and does change
dramatically from year to year and we've seen many changes over the past
several years.
[Get the latest tax news].
Having been a tax consultant for many years, working in various office environments, I know first-hand that there are usually only one or two very compentent people in any tax office. The rest, however well-meaning should either not be doing taxes at all or need a great deal more training.
Before you totally give up on finding a reliable and knowlegable tax preparer, let me say there are some fine experienced preparers that are worth every cent they charge and more. With a few helpful tips you can know after a brief interview, whether or not your tax preparer is right for you.
The Interview
- First does you preparer make eye contact with you? Do they give you a feeling of confidence? If your preparer has their head buried in their computer screen, they may not be giving your taxes the proper attention they deserve. While this is not a steadfast rule, it is something to consider.
- Does your preparer take the time to look over your documents or does he or she just start entering data? It's important too that a preparer take a personal interest in your tax situation and obtain the personal details of your life in order to identify keys to possible deductions, sort of like a good detective would search out the facts.
- If you are married and file jointly, with two dependents, and your income is below $45,373 your preparer should ask you if any of your children work, if so, how much they earn. They should also inquire if your dependents reside with you and for how long. These are key indicators that a preparer knows the Earned Income Credit (EIC) rules and knows how to properly apply them.
- The preparer should inquire as to whether or not you provide support for an individual or individuals who do not reside with you, such as a parent or sibling. These deductions are often missed and add up quickly.
- Don't be afraid to ask how long the preparer has been doing taxes, not just how long they have been licensed, if indeed they are.
- Find out if the preparer is affiliated with a professional organization that provides its members with continuing education and resources and holds them to a code of ethics.
IRS Helpful Hints When Choosing a Return Preparer
- Ask about service fees. Avoid preparers who claim they can obtain larger refunds than other preparers, or those who guarantee results or base fees on a percentage of the amount of the refund.
- Plan Ahead. Choose a preparer you will be able to contact after the return is filed and one that will be responsive to your needs.
- Get References. Ask questions and get references from clients who have used the tax professional before. Were they satisfied with the service received?
- Research. Check to see if the preparer has any questionable history with the Better Business Bureau, the state's board of accountancy for CPAs or the state's bar association for attorneys. Find out if the preparer belongs to a professional organization that requires its members to pursue continuing education and also holds them accountable to a code of ethics.
- Determine if the preparer's credentials meet your needs. Are they an Enrolled Agent, Certified Public Accountant or Tax Attorney? Only attorneys, CPAs and enrolled agents can represent taxpayers before the IRS in all matters including audits, collection actions and appeals. Other return preparers may represent taxpayers only in audits regarding a return they signed as a preparer.
After the Tax Forms are Completed
- A reputable tax professional will sign your tax return and will provid you with a copy for your records.
- Review your return before you sign it and ask questions on entries you don't understand.
- No matter who prepares your tax return, you (the taxpayer) are ultimately responsible for all of the information on your tax return. Therefore, never sign a blank tax form.
The IRS has additional information available on this topic. [See IRS Fact Sheet FS-2008-10.]
![Income Tax Checklist [pdf]](/img/checklist.jpg)
Income Tax Checklist
I've provided a condensed two-page worksheet to help the average taxpayer compile his or her tax documents together. This worksheet is not exhausted and is not intended for business owners, who will need much more information to prepare their taxes.
Print off a copy of my Income Tax Checklist. Take it and your tax documents along with you on your appointment with your tax preparer. Be sure to jot down any notes and/or questions you may have on the reverse side of the worksheet. It's always a good idea to bring along last years return for comparision, if an error is found the return can be amended (within three years). Being organized and prepared can make the process much less painful and time consuming, saving you a return visit to your preparer.
While many companies offer "drop-off" services, I would caution against using them, unless of course you have been using the same tax consultant for years. It's my personal experience that dropped off returns tend to get pushed off onto the least experienced preparers and often don't receive the attention they deserve.
Tips on Choosing a Tax Advisor
Vernon Jacobs, CPA provides additional resources, which you may find useful. On his website he had this to say:
Finding ways to legally avoid taxes involves knowing the law, knowing what has been tried and failed, and knowing the penalties for being too aggressive. While the IRS instructions may tell you how to fill out a tax form, they don't explain the economic advantages and disadvantages of investing in a low income housing program, transferring income producing assets to children, investing in various kinds of investments other than stocks and bonds, contributing appreciated assets to a charitable annuity trust, electing to take part of your salary as a medical expense reimbursement and dozens of other alternatives. The IRS does not want to make it easy for you to find the financial alternatives that result in the least tax. They prefer that you do the opposite - that you pay the most possible tax.
Everyone dreads tax time but with a little time and effort on your part, you can help tip the scales more in your favor. Why pay the IRS any more than you absolutely have to?
If you have a question regarding the material covered in this article or an issue you'd like me to address, send your comments and questions to: Annette M. Hall
Updated: April 01, 2011
