Maximizing Your Tax Refund: Why You Should Choose A Qualified Tax Preparer

With tax season underway, it is important to make sure you have a qualified preparer handling your most sensitive personal information.

By Sandra Jones

It’s tax season…and some of you may be cringing at the thought of completing your taxes. But who you allow to do your taxes could be problematic, if you don’t have an experienced and trained tax preparer who knows tax laws. “Your tax preparer should be an individual or business that you trust. Not only do they have access to your most personal information, but you are trusting them to give you professional advice, including possible credits and deductions,” Melissa Ames said, President and CEO, BBB Youngstown.

The Better Business Bureau says there are different types of tax preparers and their qualifications. Only enrolled agents, certified public accounts, and attorneys may represent their clients to the IRS on matters such as audits, collection issues, and appeals. The agency offers these tips to finding someone you can trust with your finances and personal information:

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Enrolled Agent or EA is a tax preparer that has been approved by the IRS to represent taxpayers. An EA must either have prior qualifying employment with the IRS or pass an intensive two-day exam on federal taxation and complete a background check. An EA may work independently or as part of a firm and specialize in specific areas of tax law.

Certified Public Accountants or CPAs have a college degree (or the equivalent in work experience). They are licensed after passing a state professional qualifying exam and are highly skilled in accounting. This makes them good candidates for complex tax planning and preparation because they are abreast of constant changes to tax laws. If you have a complete tax return, a CPA may be your best choice, but they will charge much more than basic tax preparers.

Tax attorneys often charge the highest fees as tax preparers. If you’re looking to shelter part of your income legally or if you need specialized advice on municipal bonds, estate planning, hiring a tax attorney is a good option.

Non-Credentialed tax preparers are those who often work part-time or only during the tax season. These preparers must have an active preparer tax identification number (PTIN) through the IRS, but beyond that, regulating tax preparers is done at the state level. In most states, anyone can prepare tax returns for others without having to take an exam, get a license, or comply with other government regulations.

According to the BBB, most tax preparers are legitimate and competent, but keep in mind that without a national license requirement, they may be working off of their own personal research and experience. So, it is important you conduct a thorough interview with the tax preparer before you hire them.

So, how can you pick the right tax preparer? The BBB has this advice to help you choose a trustworthy and competent preparer:
Review the tax preparer’s credentials. EAs, CPAs, and tax attorneys are all qualified to represent their clients to the IRS on all matters. Other preparers can help you with forms and basic matters but cannot represent you in case of an audit. Don’t be afraid to ask about their qualifications before hiring them.

Be wary of big promises. If a tax preparer guarantees you larger refunds than the competition, this is a red flag. Many such tax preparers base their fees on the amount of your return and may be likely to use shady tax preparation tactics. And avoid offers like “refund anticipation loans” because you’ll probably lose a large percentage of your return to commission fees.

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Get referrals from friends and family. One of the best ways to find a trustworthy tax preparer is to get recommendations. Once you have a few options, check BBB.org, and read the consumers’ reviews or complaints. This will give you a clear picture of what to expect.

Think about availability. If the IRS finds errors in your tax forms or decides to perform an audit, will your tax preparer be available to help you with the details? Find out whether you can contact the tax preparer all year long or only during tax season.

Ask about fees ahead of time. Before you agree to any services, read the contracts carefully and understand how much the tax preparer charges for their services. Ask about extra fees for e-filing state, federal, and local returns, including fees for any unexpected complications.

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If things don’t add up, find someone else. If a tax preparer can’t verify their credentials, has a record of bad reviews, or their business practices don’t seem convincing, don’t do business with them. Remember that if you hire them, this individual will handle your sensitive personal information. “No one wants to have an issue with their tax return,” Ames said, “depending on the individual’s situation, there could be errors which would flag the individual for an audit.”

Ames said Identity theft can happen in a variety of ways. “The BBB has seen many reports of individuals having a con artist file a fraudulent tax return in their name. Therefore, Ames points  we recommend that you contact any entities that may be affected. We also recommend filing a local police report, get a credit report, and, if necessary, putting a credit freeze to prevent any new accounts from being created.” She points out, that IdentityTheft.gov, created by the Federal Trade Commission (FTC), is an excellent resource for Identity theft victims.

The deadline to file your income tax forms is April 18th.

This article was produced by Sandra Jones. She’s served as an investigative reporter for nearly two decades. She has received numerous awards for her broadcast reports.