Filing your taxes can be nerve wracking, but with a trustworthy and knowledgeable tax preparer, it can be a breeze. Finding a tax preparer that is right for you though, is a very crucial part of having a good experience. The preparer you choose will have access to information about you, your finances, and of course your social security numbers. Releasing this information to an untrustworthy or negligent preparer could result in great financial burdens.
You should find a tax preparer you can trust and with expertise to handle your tax situation. There are varying skill levels and education levels to be aware of when looking for a tax preparer. As well as having different levels of education, certain types of credentials allow your tax preparer to represent you on all matters with the IRS. Other credentials only allow your preparer to communicate with the IRS on a limited basis. Below are a few types of tax preparers with varying types of credentials.
- Enrolled Agents – Licensed by the IRS. Enrolled agents must demonstrate proficiency in federal tax planning, preparing returns, and were well versed in representation. After passing the exam, they must complete 72 hours of continuing education every 3 years.
- Certified Public Accountants – Licensed by state boards of accountancy, the District of Columbia, and U.S. territories. Certified public accountants must pass the Uniform CPA Examination. They must earn a degree in accounting and meet requirements regarding experience and good character. In addition, CPAs must complete specified levels of continuing education.
- Attorneys – Licensed by state courts, the District of Columbia or their designees. Generally, they have earned a degree in law and passed a bar exam. Attorneys generally have on-going continuing education.
Enrolled Agents, CPAs, and Attorneys have unlimited representation rights. Whether they prepare the return or not, they can represent you if you give them permission. They are also able to represent you in matters such as audits, appeals, or payment and collection issues. This can be very helpful, especially if you have returns from the past that are incorrect or being audited, and are looking for a new preparer.
Annual Filing Season Program Participants are able to represent clients whose returns they prepared and signed but only before customer service representatives, revenue agents, and the Taxpayer Advocate Service. They cannot represent clients whose returns they did not prepare, and even if they did prepare the return in question, they may not represent you regarding appeals or collection issues.
Tax Preparer Red Flags
No matter what level of education or what credentials a tax preparer has, they must all have an IRS issued preparer tax identification number (PTIN) in order to legally prepare your tax return for compensation. In addition to having a PTIN, there are a few red flags the IRS suggests you look out for when you choose a preparer.
- Promising you a bigger refund before they look at your financial information.
- A preparer that asks you to sign a blank or unfinished tax return.
- The firm does not offer IRS e-file.
- A preparer that refuses to sign your tax return.
If you come across any of these situations while searching for a preparer, your best is to go with another preparer that does not have any of these red flags. Remember, find a preparer that has the credentials needed for your tax situation, and one that you trust to keep your personal information safe, and tax season can be a stress of the past!
