Choosing a Tax Preparer

What qualifications do you legally need to prepare someone’s taxes?

Unless you live in California or Oregon, none.

You read that right. Anyone can set up a desk in the local supermarket and offer tax preparation services for a fee. That’s important to know, because you don’t want to assume someone knows what they’re doing simply because they’re charging you for their services, while in reality, they could end up costing you thousands of dollars in fees, and possibly worse.

It’s a good idea to have a professional prepare your taxes, especially if you’ve gone through a life change (marriage, divorce, etc.) received an inheritance or are self-employed. However, you need to know what to look for when shopping for a tax preparer.

If it seems safe to work with one of the large tax-preparer companies consider this: many large chain-store type of places sometimes hire high school graduates who run though a questionnaire, virtually the same thing you can buy for about $50 at Staples or do on-line for even less. While a professional accountant will be more expensive, missing a deduction because you’re working with someone who wants the seasonal employment rather than a true professional can be much, much more expensive than an accountant’s fees. Before working with a large company, be sure to find out the qualifications of the person who will actually be preparing your return.

You can be sure you’re working with someone who knows what they’re doing by selecting a CPA (www.nsacct.org) or an ‘Enrolled Agent’, a federally licensed tax specialist. Since many Enrolled Agents are former IRS employees, they’re knowledgeable and competent. Find one at www.natptax.com.

If your situation is relatively simple, you can prepare your own return using one of the software programs available. If not, you might want to ask trusted friends, relatives, or coworkers if there’s a tax preparer they’ve been happy with. Nothing beats a referral from someone you know. You might want to ask the preparer what they guarantee. If there’s a mistake on the tax return, will they cover penalties, fines, and interest? Some do, but some don’t, so don’t take it for granted that you’re protected.

Also consider ‘free file’ if you’re income eligible. Check out the IRS website for details. Low and moderate income filers can qualify for the federal VITA program that offers free assistance in filing your returns, and anyone can call the IRS for help at 800-829-1040.

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