With the last-minute tax law changes, taxpayers who have always prepared their own returns are looking for outside help to ensure they receive all the benefits they are entitled to under the new laws. Additionally, once you have a relationship with a tax professional, he should be able to advise you how the new laws will affect your 2013 taxes.
Most tax preparers are professional, ethical and honest. When choosing someone to prepare and file your taxes, you should consider several factors. First, there are several types of preparers you should never consider. Among these are companies or preparers who claim they can get you a higher refund than others. Returns that are prepared honestly and competently will all result in you receiving the same refund. There is no secret formula to calculate a bigger refund.
Second, you should avoid any preparer who bases the fee charged on a percentage of the refund. This can lead to the “padding” of your expenses and the “shaving” of your income. While these can increase the refund you receive, the fee you pay the preparer is increased, resulting in a tax return that may be questionable at best. Remember you are legally responsible for the information contained in your tax return, not the preparer.
When choosing a tax professional, you should keep in mind reputation, credentials and stability. Ask your friends and associates who they use as their preparer, and if they are satisfied with the service they received. You should be comfortable entrusting your personal information with this person or company.
Tax preparers can have different titles based on their education and experience. They can be called a Certified Public Accountant (C.P.A.), an Enrolled Agent (E.A.), an Accredited Tax Preparer, a Licensed Public Accountant or a Tax Attorney. Only C.P.A.s, E.A.s and attorneys can represent taxpayers before the IRS in all matters. This representation includes audits, collection actions and appeals. Other types of preparers can represent you during an audit only. You should inquire about the preparer’s affiliation with professional tax organizations. These organizations provide tax preparers with ongoing education and resources and hold them to a code of ethics.
Unfortunately, the IRS does not respond instantly when problems occur with your return. Sometimes it is months, even years, before they question an entry in your return. When choosing a preparer, you need to consider whether that individual or their firm will be in business for the long run. The tax professional you choose should always sign the return and provide you with a copy for your records. They should make you aware of how to reach them should you have questions when the busy tax season is over.
Choosing a tax professional is an important decision and should be made carefully. Please keep these cautions and suggestions in mind when choosing someone to prepare your return(s).
William G. Lako, Jr., CFP®, is a principal at Henssler Financial, and a co-host on Atlanta's longest running, most respected financial talk radio show "Money Talks" airing Sundays at 10 a.m. on Talk 920 AM, WGKA.