If you were not satisfied with the services you received from your tax pro this tax season, now’s the time to re-evaluate the relationship and if necessary, find a new person to have in your corner.
There’s always the worry that grass is greener on the other side. If you aren’t sure if it’s time to part ways with your tax professional, ask yourself the following questions:
Is this person qualified? Ask to see your preparer’s credentials (aside from a business license) to make sure that he or she is qualified. At the very least, the pro should be a licensed tax preparer, which is the lowest level and fine to use if all you have is a stack of W2s. Or she/he should be a certified public accountant (CPA) or an enrolled agent (EA).
If you are self-employed or otherwise have a complex return, using an EA or CPA is important. You may pay a bit more in fees, but you will likely save even more in tax dollars.
All preparers are required by the IRS to have a Personal Tax Identification Number (PTIN) which will be listed on the tax return beside the preparer’s signature.
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Is there a personality glitch? You don’t have to be friends with everyone you do business with, but it helps if there is a good sense of communication. You should also always feel that your tax professional has your best interest at heart. Someone who understands your financial situation and is sympathetic to your tax obligations is more inclined to be in your corner and help you minimize your tax liabilities.
Did I overpay my taxes? Writing a big check to Uncle Sam may have been necessary; it all depends upon the circumstances. But the average taxpayer does not know the deductibility of many transactions. Did your tax pro ask a lot of questions to determine if there were missed deductions in the list you provided?
What does the tax prep fee include? I would advise to never select a tax pro based on fees alone. After all, the old maxim: “you get what you pay for” has been around for generations for a reason. In my experience, fees charged for tax preparation services vary widely. It depends upon the level of experience and knowledge, amount of compilation work required and region of the country.
With your tax return in front of you to describe the contents, shop around to find out the average fee in in your area. Be sure to ask if there are extra charges for electronic filing or direct deposit of refunds.
Are the fees fair and fairly represented? A friend of a friend came to me for tax prep a few years ago after she was hit with an unexpected large fee the year before by her former tax pro. All she had was a small W2, but the fee was based on the amount of her refund. Because she was entitled to the Earned Income Tax Credit, she received a hefty refund and the tax pro took a percentage, thus charging her approximately $300 more than the average fee for a simple return.
I do not recommend using a tax pro who charges like this or who wants to split the refund with you. It’s not ethical. Other ethical considerations set forth by the IRS: Your refund belongs to you and should be deposited to your bank account, not the tax pro’s bank account. You should write a separate check to pay the tax prep fee.
Does the tax professional use professional grade software? If they are using an off the shelf software that the average person buys or free file software on the IRS website, go elsewhere.
Is the tax professional available after tax season? If you are audited, you want to be able to rely upon either minimal services (input only) or representation services from the pro who prepared your income tax return. If your tax pro is around only from Jan to April 15, you will be on your own or will need to consult with another tax professional if you have questions, received confusing correspondence from the IRS or state, or an invitation to an audit.
Did the tax professional sign your return? If you pay for professional services, there should be a signature, a PTIN, and the tax pro’s address listed at the bottom of page two of the Form 1040 to indicate the return was prepared by a professional. The tax pro should also return all paperwork that you provided to you.
Remember, to get the best quality service, schedule a tax appointment for early in the year. Some tax professionals offer a discount if you schedule early.
And after tax season, especially if you are encountering major life changes such as a job change, a relocation, selling or buying a house, getting married, getting divorced, retiring or any other drastic financial change, schedule a meeting with your tax professional to plan a strategy for dealing with it. You don’t want any big surprises come April 15 next year.
Bonnie Lee is an enrolled agent admitted to practice and representing taxpayers in all 50 states at all levels within the Internal Revenue Service. She is the owner of Taxpertise in Sonoma, Calif., and the author of Entrepreneur Press book, “Taxpertise, The Complete Book of Dirty Little Secrets and Hidden Deductions for Small Business that the IRS Doesn't Want You to Know.” Her new e-book Taxpertise for the Creative Mind Murder, Mayem, Romance, Comedy and Tax Tips for Artists of all Kinds is available at all major booksellers. Follow Bonnie Lee on Twitter and on Facebook.