Have you got your billions back America?


These catchy H&R Block commercials roll around every tax season, just like the pile of tax documents filling your mailbox. Preparing your taxes takes time and effort, not to mention a keen eye for detail. That’s why, if you’re like the roughly 80% of Americans who hire the job out or use tax software, it’s imperative you find a tax professional who is trustworthy, responsible, and has the proper credentials.

Tax season makes us particularly susceptible to thieves, scammers, and otherwise shady individuals. We hand over precious financial and personal information to a tax preparer believing that they have our best interests at heart, the wisdom to operate within the system accordingly, and the moral compass to follow the law. These examples might make you think twice about whose handling your money:

The Internal Revenue Service has an online tool to help you find tax preparers who meet the agency’s qualifications for preparing federal returns. To learn more about this list and other tax-related information, click on this ActiveCare post from 2014

One of the best ways to verify your tax professional’s credentials, however, is to run a background check on your tax preparer. If you use a big name national chain and you’re not sure of their background check policies, you have every right to inquire about their hiring and training procedures. Independent tax preparers may need a little more investigating on your part. Again, you have every right to inquire if they’ve ever had a background check conducted but they are under no obligation to share the results with you. You could also ask them if they’d be willing to undergo a background check, but if you’re not familiar with hiring, compliance, and background screening laws, you might be unknowingly setting yourself up for lawsuits if you tread the wrong way.

Perhaps the best method for inquiring about your tax preparer’s background and credentials is to contact your state’s board of accountancy to check their license status or any disciplinary actions.

You’ll also want to consider following these tips to track down a top tax preparer. This information comes courtesy of this ConsumerReports.org story.

Know The Difference

Picking the right pro to perform your tax returns is important. You may not need the high-end pedigree of a Certified Public Accountant but perhaps you need more than the streamlined approach of a national chain. Here’s a quick breakdown of tax professionals and what they do (credit ConsumerReports.org):

Certified public accountants. Not all CPAs specialize in doing individual income-tax returns, so ask up front. In addition to using the IRS’s tax-preparer search page, you can check with friends and neighbors or go to your state’s CPA society (type “CPA society” and your state’s name into a Web browser).  

Enrolled agents. Unlike CPAs, who can handle a variety of financial activities, EAs focus solely on taxes. They must have worked for the IRS for at least five years or passed exams on tax codes and calculations. Enrolled agents might work for themselves or in a CPA firm or storefront office. The IRS tax-preparer search page can help you find one, or you can go to the website of the National Association of Enrolled Agents.

National tax-prep chains. Storefront operations like H&R Block, Jackson Hewitt, and Liberty Tax Service can be adequate for simple, straightforward returns, and they’re relatively inexpensive. The not-for-profit National Consumer Law Center says national chains are less likely than independent storefront tax preparers to hit you with “junk” fees, such as application and document-prep charges. Tax preparers in franchise offices of the national chains have usually passed at least a several-week-long course, and newcomers’ work is reviewed by experienced supervisors, according to the companies.

Free tax prep. If your household income was low to moderate for your community or you’re 60 or older, you might not have to pay anything for tax help. The AARP Foundation Tax-Aide service will pair you with trained volunteers who can handle Form 1040 and schedules A and B.

Interview Your Preparer

Do you have a preparer tax-identification number? All paid tax preparers, whether they’re enrolled agents, CPAs, or tax attorneys, must have such a number, called a PTIN.

What are your credentials? Make sure that your prospective preparer has passed recent state or federal tests. (California, Maryland, and Oregon require licenses.) Look for seven to 10 years of experience to ensure that your preparer has dealt with a variety of tax and economic situations. Ask, too, if the preparer is a member of a professional organization related to tax preparation and attends continuing education classes.

What kinds of clients do you usually work with? Look for a preparer with clients similar to you.

Will you file my returns electronically? Filing electronically ensures fewer mistakes and helps speed your refund. Your tax preparer should be able to handle it for you. (Tax preparers who handle 10 or more returns are required by the IRS to file electronically unless the client opts to file a paper return.)

Can you give me a price quote? Tax preparers often say that they can’t tell you what they’ll charge until they determine
which forms you’ll need. But you can try to pin down the preparer by presenting last year’s forms or by asking for a list of all fees. Avoid preparers who base their fees on a percentage of your refund.

Do you provide audit help? CPAs and enrolled agents can usually represent you before the IRS. The national chains provide free advice to clients, but you might have to pay extra to have someone accompany you to an audit or talk to the IRS on your behalf.

We’d love to hear your tax preparation stories – the good and the bad! Shoot us a comment below!

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