So I’m going to let you in on a little secret: I don’t prepare my own tax returns. Completely true. It is how I stay married.
You see, I used to prepare my own returns for my business and for my household. And I did just fine for a bit. But then I had three kids (and a dog). Those darn kids insisted on stuff like eating every day and having clean laundry and occasionally snuggling on the sofa. Add that to managing my business, writing my blog and occasionally running a few miles and I didn’t have a whole lot of time left over. Oddly enough, my husband felt that I shouldn’t spend the rest of it sorting out our taxes. And – much to his surprise – I agreed.
As much as I’m a control freak, I firmly believe that there’s no shame in hiring someone to help you out. In fact, I highly recommend it. An accountant or other tax professional will usually be able to prepare your simple return for between $200 and $500, depending on the complexity and your geographic location. For me, considering the time value of money (and the intangible value of my time for my family), it’s well worth the cost.
That said, I’m not insisting that you hire a tax preparer. Some folks – God love ’em – like doing their own taxes. If you can do it on your own – and you want to – for the equivalent of $200-$500 of your own time, then do it. But if you can’t, hire someone.
Choosing a tax professional can be confusing. Here are some tips:
1. Understand what you need. Do you simply need a preparer? Do you need help with tax planning? Are you being audited? Having problems with the IRS? Depending on your situation, you might need an accountant, an attorney, an Enrolled Agent or a CPA – or more than one. We don’t all do the same thing. As a tax attorney, I focus on tax planning and tax compliance issues (appeals, examinations, FBAR reporting). I don’t prepare returns. And many accountants I know? They won’t touch appeals with a ten foot pole. Sort out what you need before you start looking.
2. Ask about qualifications. New regulations require all paid tax return preparers to have a Preparer Tax Identification Number (PTIN) and register with the IRS. Other professionals (like attorneys and CPAs) may have additional licensing requirements. Inquire about education and experience. Ask what those initials on the business cards mean – sometimes, they are more or less made up to look impressive. Yes, you can buy your way into a number of organizations in order to tack on a few suffixes. It is absolutely okay and not insulting to ask about credentials. If your tax preparer doesn’t want to tell you about his or her training, chances are, there’s a reason.
3. Do your homework. Check with professional organizations, licensing agencies and the Better Business Bureau to determine whether any complaints have been lodged against the preparer. Heck, Google around a bit. A complaint isn’t necessarily indicative of any wrongdoing, but you should regard a preparer with a number of complaints with some measure of caution.
4. Get some opinions. It’s weird that people will ask for a gynecologist’s name in a heart beat but will often remain tight-lipped about tax professionals. Ask. Ask your lawyer, your investment advisor, your colleagues and your neighbors who they use for tax preparation and tax planning services. Word of mouth is one of the best ways to find a good tax professional – and a good way to determine who you should avoid. But don’t accept an opinion as gospel (remember, this is a country full of folks who watch the Kardashians on TV so take some opinions with a grain of salt) and do some follow-up on your own.
5. Make sure the bottom line is really the bottom line. Don’t be fooled: bulk tax companies are not always less expensive than professional services firms and they tend to hit you with fees for extras and try to sell you products. If the initial fee is small, ask upfront about add ons, “accuracy guarantees” and more that might cost you money. Remember that “too good to be true” usually is. Don’t be sucked in by promises of huge refunds if you’re not sure that you qualify. And ignore preparers who base their fees on the size of your refund: the IRS has found a disproportionate number of fraudulent preparers use this technique.
6. Bigger Isn’t Always Better. *Insert random off color joke of your choice here.* Now that you’ve stopped giggling like a 12 year old, take my word for it that bigger isn’t always better. Sometimes bigger firms and bigger companies mean more resources. But sometimes they just mean bigger fees. Don’t jump to conclusions about a professional based on the size or sparkle of their office.
7. Choose someone who will stick around. I am not a fan of many bulk tax prep companies because they are gone most months out of the year. You shouldn’t have to make a call to a call center and speak with someone who will inevitably give you the run around if you have a question. I prefer tax preparers that are around more than seasonally – if yours shuts down for the year on April 19, consider finding someone more available.
8. Use your gut. If your calls or emails aren’t returned within a reasonable amount of time (keeping in mind that during busy seasons, wait times will be understandably longer), consider going elsewhere. If the staff is rude, if the tax preparer seems pre-occupied, walk away. You’re paying for a service. You deserve to be treated in a professional manner. Remember that you’re liable at the end of the day for the information on your return, not the preparer. If the preparer isn’t willing to work with you to make you feel comfortable, find someone who will.
9. Nothing lasts forever except maybe Betty White’s career. If things aren’t working out, well, then, they’re not working out. It doesn’t have to be something huge – maybe you just don’t get along. It’s okay to pay your bill and walk away. I’ve done it. Twice. And I still refer folks out to the one accountant; he’s a fine accountant, just wasn’t a good fit for us. This isn’t a “till death do us part” type deal. It’s a professional transaction. And while I believe that it makes the most sense to have a reliable, consistent tax professional (see #7) to depend on, sometimes you’re just not that into him (or her). And that’s okay.
Even if you don’t think you need a tax preparer or a tax attorney, I vote that you make friends with one anyway. No, not just because we’re cute and offer sparkling wit and cocktail party conversations… but because one day, you might need a tax professional.
Here’s what you don’t want to be doing: calling up and saying, “I need to hire an attorney to represent me in an audit. Tomorrow.” And you don’t want to be crouched at the bottom of your closet with the feds banging on your door as you desperately dial up information for the first number you can find. By then, it’s probably too late.
So all of those tips that I just offered for finding a tax pro? Here’s perhaps the most important one to add to the mix: do it now. Not tomorrow. And definitely not the week of April 10th. By that time – and trust me on this – tax professionals are tired. They might be a little cranky. They might not be so quick to return your calls and they might be a little short when they do. And you would be, too, if you’d been fed a daily diet of tax forms for the past four months (tax season officially starts in January).