9 Tips to Pick a Tax Pro – If You Need One

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Just because taxes are complicated doesn't mean simple software can't do the job. Here's how to determine if you need a pro, and if you do, how to find the right one.

Do it yourself with paper and pencil, use software, or pay a professional: As long as it’s accurate, the IRS doesn’t care how you file a tax return.

But you should, because if your name’s on it, you’re responsible for it. So if you’re going to go to the hassle and expense of using a paid preparer, get your money’s worth.

In recent years the IRS has started clamping down on shady and otherwise unprofessional professionals. Paid preparers are now required to have a  Preparer Tax Identification Number, or PTIN, and beginning next year, most paid preparers will need some kind of credential. The IRS says: “Acceptable credentials will include enrolled agents (EAs), certified public accountants (CPAs), attorneys, and registered tax return preparers (RTRP).”

But before asking a pro about credentials, there’s a question you should ask yourself first. Namely, “Do I even need one?”

Check out the video below from Money Talks News founder and CPA Stacy Johnson, then read on for more…

Do you need a pro?

If you made $51,000 or less last year, you can sit down with an experienced tax preparer free – often without even making an appointment.

If you made $57,000 or less last year, you can use free software, courtesy of the IRS Free File program. There’s a ton to pick from – check out their website.

In fact, the Free File website is a good place to visit even if you made more than $57,000 last year. That’s because the same companies providing free software to those eligible for Free File will also provide it for a price to those who aren’t.  And you’ll probably find much better prices from lesser-known providers than on their heavily-advertised cousins.

For most of us, software is the perfect solution for taxes. Because while income taxes may seem exceedingly detailed and complicated to you, doing math and remembering a few thousand rules is exactly what computers were made for.

Is the human touch worth the money?

Whether you use H&R Block or a local CPA, everyone preparing taxes for a living is doing the same thing you could be doing: typing your information into a software program that spits out a completed return. In other words, in many cases when you’re sitting across the desk from a tax professional, what you’re really doing is paying someone from $50 to $500 an hour to mash a keyboard for you.

That being said, human beings can do things software can’t. They can provide projections, strategic advice, and suggest tactics to reduce your taxes, prepare business plans, and evaluate investment opportunities.  They can refer you to other useful professionals, from lawyers to real estate agents.

So don’t be penny-wise and pound-foolish: If a pro can really help you, find one.  But if you’re just going to drop off your W-2 and pick up your taxes (along with a hefty bill), that’s nuts. If you don’t need personal service, use software and do your own typing.

If you do decide you need a pro, here’s what to look for…

9 tips to find the right tax pro

Many of the steps to find the right tax preparer mirror those for finding any pro, from a doctor to a plumber. 

  1. Ask your friends or co-workers for referrals. Especially if you suspect their tax situation is somewhat similar to yours.
  2. Check out credentials. There are lots of designations that could indicate tax expertise, from registered tax return preparer to tax attorney. Generally, but not always, the most educated and expensive are, in declining order, tax attorneys, CPAs, and enrolled agents. You obviously don’t want a $500/hr lawyer answering questions a $75/hr enrolled agent could answer.
  3. Ask about experience. A license and education are nice, but experience is critical, especially experience in dealing with people in situations similar to yours. If you can get someone with 30 years’ experience for the same price as someone with three, do it.
  4. Ask for references. Any professional in any field should be happy to provide them. Of course, only an amateur or an idiot would provide the name of a client who’s going to bad-mouth them, so don’t put too much weight on this one.
  5. Talk to several before you decide. This is easily the single most important thing to do before hiring virtually anyone. Only after talking to several people will the positive attributes you’re seeking surface in one of them. And you might learn something each step of the way; think of it as getting free samples.
  6. Ask about continuing education. Take it from a CPA (Stacy) who admits to skating through correspondence courses to keep his license active: A license alone isn’t enough. Ask what they do to stay on top of their game.
  7. Ask about professional organizations they belong to. Again, not the be-all and end-all, but it might be an indication they at least take an interest in their profession.
  8. Make sure they’re around all year. Just in case you need help with an audit in August.
  9. Compare prices. If one pro charges more than another, what are they going to do for you to justify a higher price?

Bottom line? Most people start searching for pros before considering if they even need one.

If you’ve got a complex situation, have questions that need answering, or want to talk strategy, great: Hire someone. But don’t pay three (or 30) times more than you have to just because you’ve always done it that way. Or worse, because the commercials told you to.

Want more tax advice? In the next couple weeks we’ll have a series on tax hacks.

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!


Read Next: Ask Stacy: What’s the Best Way to Borrow?

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