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How to Choose a Qualified Tax Preparer


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If you shy away from preparing your own taxes, you’re not alone. According to IRS statistics, nearly 60% of Americans who e-file hire tax professionals to prepare their returns. Doing your own return can be time-consuming, frustrating, and more than a little intimidating.

Having someone else prepare your tax return can take a load off your shoulders. However, turning your tax return over to the wrong person can do more harm than good. There are dishonest tax preparers out there looking to make a quick buck, just as there are unscrupulous practitioners in any profession. You’ve probably heard horror stories of tax scams perpetrated on unsuspecting clients. It pays to be cautious about who you hire to do your taxes.

How to Choose a Qualified Tax Preparer

Given the complexity of tax law and the fact that tax preparers have access to so much of their clients’ personal information, you might assume that becoming a paid tax preparer would entail meeting certain requirements for education, experience, or even undergoing a background check. Unfortunately, this isn’t the case.

Almost anyone can start a tax preparation business; they just have to apply for a PTIN from the IRS and pay a $35.95 fee. Whoever you hire to prepare your tax return should, at a minimum, have a PTIN. Here are some other tips to follow.

1. Check the IRS Directory

The IRS maintains a directory of PTIN holders who currently hold credentials recognized by the IRS (such as Certified Public Accountants (CPAs), enrolled agents, and attorneys) or who have completed the Annual Filing Season Program (voluntary continuing education courses covering federal tax law and ethics held each year). Almost anyone can have a PTIN, but the credentialed preparers in this directory tend to have more skill, education, or experience.

2. Investigate Marketing Claims

Be very wary of tax preparers who promise they can get you a larger refund than their competitors.

3. Examine Preparer Fees

Most tax preparers charge either a flat fee or an hourly rate. Avoid working with preparers whose fee is a percentage of your refund. This fee structure gives them an incentive to overinflate your refund by claiming false expenses, deductions, or tax credits.

4. Review Your Return Before Filing

If a preparer asks you to sign a blank tax form, refuses to give you a copy of your tax return, or won’t allow you to see your return before it’s filed, those are big red flags. They’re also violations of Circular 230, the regulation that governs professionals who practice before the IRS. You can report a tax return preparer for improper tax practices by completing Form 14157 (Return Preparer Complaint) and sending it, along with supporting documentation, to the IRS.

5. Ask About Year-Round Availability

Some preparers set up shop during tax season and disappear shortly after April 15 (though with 2019 taxes not due until July 15, that may change for 2020). If something goes wrong, you may need your preparer to help you answer questions or clarify issues months or even years after your return is filed. If they’re not around, they won’t be much help. Look for someone who’s available year-round.

Pro tip: If you choose to file your taxes through a preparer such as H&R Block, you can talk to a real CPA and have them do a line-by-line review at any time during the year.

6. Check Preparer Credentials

When searching the IRS directory of federal tax return preparers, know that not all credentials are created equal. Only tax attorneys, CPAs, and enrolled agents can represent taxpayers before the IRS in all matters, including audits, collections, and appeals. Participants in the Annual Filing Season Program may only represent you for a return they personally complete and sign. This means that if you have issues from prior years, they can’t legally help.

7. Ask About Professional Affiliations

Many tax professionals belong to professional associations that provide continuing education and ethical guidelines. The IRS maintains a list of recognized tax professional association partners. Membership in one or more of these organizations doesn’t automatically mean the preparer is legitimate, but many fly-by-night preparers won’t want to pay the money to join.

While you’re at it, you might also do a search to see if any former clients have filed a complaint against your tax pro.

8. Expect Your Preparer to Be Thorough

Make sure your preparer asks to see documentation, forms, and receipts and asks a lot of questions. This helps them determine whether you qualify for different tax breaks and how to classify your expenses. It also helps you avoid penalties later. If your tax preparer asks few questions or none at all, it’s a cause for concern.

9. Check Your Tax Return Before It’s Filed

You are responsible and liable for the contents of your tax return, even if someone else fills it out. Never sign a tax return before checking that it’s accurate.

If you’re not sure about something, don’t sign your return. Ask the preparer to clarify any income, deductions, or tax credits you don’t understand. When you sign the return, you’re asserting under penalty of perjury that it’s complete and accurate.

Final Word

This tax season, keep your eyes open and don’t let the promise of low fees or a big tax refund keep you from doing a thorough check on your tax preparer. No cost savings or windfall refund can make up for the headache of having your identity stolen or getting audited by the IRS, especially if your shady tax preparer is long gone by the time you realize something is wrong.

Hire a reputable tax professional, review their work carefully, and this tax filing season will be worry-free.

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