Tax Hacks 2015: 7 Tips to Find the Best Tax Pro

Photo (cc) by Fort Rucker

An astonishing 80 million Americans pay a tax preparer each year, according to an estimate from Accounting Web. And while the IRS began to register those preparers in 2010 and had plans to implement competency testing and continuing education requirements, a 2014 court case ruled the agency didn’t have the legal authority to do so.

That means the current tax preparation landscape is something like the wild, wild West. Virtually anyone can slap on the label of “tax preparer” and set up business, regardless of whether they have any training in tax laws.

To help you avoid being taken for a ride by an inexperienced or incompetent tax preparer, Money Talks News finance expert Stacy Johnson spoke with Tom Sawyer, a CPA with Sawyer & Latimer PA in Fort Lauderdale, Fla.

1. Look for free tax preparation services

Before you even think about paying someone for tax preparation services, see if you’re entitled to it for free.

There are two IRS-sponsored free tax preparation programs: Volunteer Income Tax Assistance or VITA, and Tax Counseling for the Elderly. These programs give eligible individuals free tax preparation assistance from trained volunteers.

The VITA program is open to these groups:

  • Individuals with incomes of $53,000 or less.
  • People with disabilities.
  • Elderly individuals.
  • Those with limited English-speaking ability.

Meanwhile the TCE program is aimed at those age 60 and older, although people of any age may be able to receive guidance from program volunteers.

You can search for VITA and TCE sites in your area by visiting the IRS website. Also see: “8 Ways to Get Free Help Preparing Your Taxes” for more details.

2. Consider using software to do it yourself

If you’re not eligible for free in-person tax preparation services, the next best thing may be to use a tax prep software program.

Depending on your income, you may be able to use software for free through the Free File program. If your adjusted gross income is $60,000 or less, head to the IRS Free File site to find software providers that will let you prepare and file your taxes for free using their programs. Make more than that? The IRS offers free electronic forms for everyone.

But even if you’re not eligible to file a free tax return, you may still want to use software to prepare your own forms. Remember, most preparers are simply entering your information into a software program of their own. Rather than pay hundreds to someone else, you could spend a lot less and use a program offered by TurboTax, TaxAct or H&R Block, among others, to do it yourself.

That said, there is still an argument to be made for paying a professional tax preparer. As Sawyer tells Johnson in the video above, software isn’t necessarily going to ask probing questions to ensure your return is as complete and correct as possible.

3. Interview several preparers

Let’s assume you’re not eligible for free tax prep assistance and you’ve decided not to go the DIY route. It could be you have a complex tax situation, or you’re simply more comfortable with a human touch.

You start finding the right pro by not stopping at the first preparer you come across. Tax preparers come with various backgrounds, personalities and education. Try to talk to at least three preparers before settling on the one who seems right for you.

4. Check for a PTIN and continuing education

While the courts did take the wind out of the IRS plans to test tax preparers, the agency does still register them. On the government website, the IRS says that everyone who gets paid to file someone else’s taxes should have a preparer tax identification number (PTIN).

Anyone who prepares or assists in preparing federal tax returns for compensation must have a valid 2015 PTIN before preparing returns. All enrolled agents must also have a PTIN.

Of course, that doesn’t mean much because there are no education requirements or competency testing to go along with that number. In other words, while you want to make sure your preparer is properly registered with the government, don’t stop there.

You should also ask how they keep up on annual changes to the tax code. Your tax preparer doesn’t necessarily need a degree, but if the extent of their experience is filing returns for Cousin Jimmy the last two years, I suggest you keep looking.

5. Watch out for bad reviews and disciplinary action

Along with your interviews, head to the Web to check up on potential preparers as well.

In some cases, a simple search of the preparer’s name may be enough to bring up reviews. For others, you may have to dig a little deeper. Websites to try include the following:

Also, if a preparer has a professional license or credential, check with your state licensing board to see if they have been subject to any disciplinary action. For preparers who are enrolled agents, you can also check with the IRS to verify their status.

6. Ask about e-filing

Although there is nothing wrong with filing via snail mail, look for someone who will file electronically. Doing so will significantly reduce the amount of time you have to wait for your refund to arrive. It may also eliminate the potential for delivery problems or misdirected paperwork.

Incidentally, the IRS requires paid tax preparers who file more than 10 returns on behalf of clients each year to e-file their forms.

7. Find out what happens in the event of an audit

Finally, you want to pick a tax pro who isn’t going to be MIA in the event you get tagged for an audit. Not all tax preparers can represent you in front of the IRS. Be sure to find out what, if any, services your preparer is willing and able to provide.

Even if you don’t get audited, you don’t want a preparer who is going to file away their paperwork and hang the “gone fishing” sign April 16. Make sure your preparer will be available to answer questions and provide guidance even after the filing deadline has come and gone.

Regardless of whether you plan on DIY taxes or expect to hire a pro, stay tuned for more tax-time advice from Money Talks News to help you maximize your refund and minimize the pain of tax time.

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