Most of you have your Income Tax Returns filed by a professional in order to take advantage of the knowledge, skills, and experience of such experts who are armed with the appropriate credentials to accurately file tax returns and also trustworthy enough to safeguard sensitive information like your social security numbers, income, investments, etc. But how do you know whom to entrust with the task of preparing your tax files? To help you select the right person to prepare your tax file, here is a checklist of questions that you ought to ask Tax Services before you hand over the assignment of preparing your returns.
- Ask for PTIN
All authorized tax preparers have a Preparer Tax Identification Number (PTIN) that implies authenticity. Without a PTIN, tax preparers are not allowed to file returns for any client. You can also crosscheck the PTIN qualifications of a preparer through the IRS Online PTIN Directory.
- Enquire about the Preparer’s Professional History Including Qualification
Please do not hesitate to ask the meaning of the string of letters on the business card of your prospective tax preparer. It would reveal a wealth of information about him. For example, a CFP or CPA or LLM may have studied tax as part of their qualification but may not have expertise in that field. A Voluntary Income Tax Assistant (VITA) or Enrolled Agent is, on the other hand, trained by the IRS to handle tax filing during peak filing season.
The IRS Directory of Federal Tax Return Preparers lists all types of preparers by their name and credentials in different cities/states. The Better Business Bureau will be able to tell you about any blot in the professional career of the preparer, his license status, or about any disciplinary action taken against him. It is important that you know about the antecedents of the preparer before you hand over your tax file to him.
- Ask about Specific Kind of File Handling Experience
There are as many kinds of tax returns as there are forms. Some preparers are proficient in Businesses (Schedule C) or Rentals (Schedule E). Some specialize in international taxpayers/expats while there are others who focus on different types of organizations. If you have special events in your file on account of your investment, occupation, or residency status, you need to find a tax preparer who has experience in handling your specific situation. Dig deep to understand the kind of accounts the preparer has experience in and whether is equipped to manage your specific circumstances at Tax Services.
Check with the preparer whether he is proficient with the tax laws of the localities/states where you need to file your return. Though federal tax rules are similar across all states, however specific states or localities might have differences in their filing requirements. The preparer should be well-conversed with these requirements in order to present your file in the most conducive manner.
- No Fishy Business with Tax Refunds
Service charges for returns preparation may vary depending upon the complexity of the file. However, you should clearly understand the components of the charges like extra cost of correction of mistakes or e-filing, etc. Steer clear of tax preparers who demand service charges to be based on your tax refund or who try to convince you that they can get you better tax refund than others. This would encourage unlawful tax credits or deductions which may come back to you later in the form of IRS Audit. Also, ensure that your tax refund is deposited only in your bank account and is not collected by the tax preparer in person or on an account.
- Check Whether the Preparer Will E-file Your Return
A very solid check that you can run to find the right tax preparer is to ask whether your return would be filed electronically or not. Generally, a tax preparer who files 10 or more returns has to e-file them. In fact, IRS has so far processed more than a billion returns since its introduction in 1990. E-filing also minimizes errors in the returns. So, a preparer who e-files your returns not only safeguards your interests but also proves that he is a fellow who is in business, providing Tax Services to more than 10 clients.
- Check the Availability of the Preparer Even after the Returns’ Due Date Is Over
In case your file comes under the scrutiny of the IRS or you have a question regarding your returns, the preparer should be around to answer them. If the preparer is a seasonal practitioner, then you do not have anyone watching your back in case the IRS wants additional information about the file.
- Ask What Documents Would Be Required for Preparing the Return
Any tax preparer worth his salt will insist on going through your forms W-2, 1098, and 1099 and also other documents related to your income and expenses in order to prepare a proper return. A preparer willing to e-file your return on the basis of your last pay-slip, which is against IRS rules, is just not good enough. The preparer should be able to tell you the requirements for special schedules, forms, or even circumstances. Due diligence is a virtue and cutting corners not an option while providing Tax Services.
- Clarify about Review of the Returns and Signing of the Same
Signing a blank return is as good as signing a blank check. The importance of reviewing your final tax papers before signing the same is extremely crucial as it is your earnings that are being reported, and it is primarily your responsibility to scrutinize whether the service provider is representing the figures in the correct manner. If you have any queries regarding the accuracy of the return, ask the preparer by all means and he is bound to provide satisfactory answers. Please do stay away from a tax preparer who insists on you signing a blank tax form.
- Check Whether the Preparer Will Sign the Return
As per legal requirements, your preparer has to sign your return and also include the PTIN in the file. Do not trust a preparer who hesitates to sign a return that he himself prepared. Also, the preparer has to give you a copy of the return filed for your records.
The above pointers are extremely relevant when it comes to picking the right person who can best represent your financial figures and also is available to answer questions in the context, should the need arise.