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How to get the right tax pro at the right price

Money Talks News logo Money Talks News 1/11/2018 Maryalene LaPonsie
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More than half of American taxpayers use a professional to prepare their taxes, according to the IRS.

But if you’re taking that route, know that the tax preparation landscape is a bit of a Wild West. Although the IRS began to register preparers several years ago and had plans to implement competency testing and continuing education requirements, a 2014 court case ruled that the agency didn’t have the legal authority to do so.

That means virtually everyone can use the label of “tax preparer” and set up business, regardless of whether they have any training in tax laws.

Thankfully, a little legwork can help you avoid being taken for a ride by an inexperienced or incompetent tax preparer. You might even get better service for free, or find the means to prepare your own taxes.

1. Look for free tax preparation services

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Before you think about paying someone for tax preparation services, see if you’re entitled to get help for free.

There are two IRS-sponsored free tax preparation programs: the Volunteer Income Tax Assistance program (VITA) and the Tax Counseling for the Elderly program (TCE). These programs give eligible individuals free tax preparation assistance from trained volunteers.

The VITA program is open to:

  • Individuals with incomes of $54,000 or less.
  • People with disabilities.
  • Taxpayers with limited English-speaking ability.

Meanwhile the TCE program is aimed at those age 60 and older. According to the IRS, the program specializes in “questions about pensions and retirement-related issues unique to seniors.” Still, people of any age may be able to receive guidance from program volunteers.

You can search for VITA and TCE sites in your area by visiting the IRS website.

2. Consider using software to do it yourself

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If you’re not eligible for free in-person tax preparation services, the next best thing may be to use a tax prep software program.

Depending on your income, you may be able to use software for free through the Free File program provided through the IRS. If your adjusted gross income is below $66,000, head to the IRS Free File site to find software providers that let you prepare and file your taxes electronically for free using their programs. Make more than $66,000? The IRS offers free electronic forms for everyone.

But even if you’re not eligible to file a free tax return, you may still want to use software to prepare your own forms. Remember, most preparers are simply entering your information into a software program of their own. Rather than pay hundreds of dollars to someone else, you could spend a lot less by doing it yourself with one of the programs offered by TurboTax, TaxAct or H&R Block, among others.

3. Interview several preparers

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Let’s assume you’re not eligible for free tax prep assistance, and you’ve decided not to go the DIY route. Perhaps you have a complex tax situation, or maybe you’re simply more comfortable with the human touch.

Whatever your reason, don’t go with the first preparer you come across. Tax preparers come with various backgrounds, personalities and education. Try to talk to at least three preparers before settling on one who seems right for you.

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4. Check for a PTIN and continuing education

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While the courts took the wind out of the IRS plan to test tax preparers, the agency does still register them. On the IRS website, the agency says that everyone who gets paid to file someone else’s taxes must have a preparer tax identification number (PTIN):

Just remember that there are no education requirements or competency testing that go along with that number. In other words, while you want to make sure your preparer is properly registered with the government, don’t stop there. The IRS offers explanations of the various credentials and qualifications that a tax preparer may hold. This information can help you gauge whether someone is a good choice.

In addition to asking about credentials and qualifications, ask how someone keeps up on annual changes to the tax code. Your tax preparer doesn’t necessarily need a degree, but if the extent of his or her experience is filing returns for Cousin Jimmy for the last two years, I suggest you keep looking.

5. Watch out for bad reviews and disciplinary action

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Along with interviewing potential preparers, do an internet search to check up on them as well.

In some cases, a simple search of the preparer’s name might be enough to bring up reviews. For others, you might have to dig a little deeper. Websites to try include the following:

Also, if a preparer has a professional license or credentials, check with your state licensing board to see if the individual has been subject to any disciplinary action. For preparers who are enrolled agents, you can also check with the IRS to verify their status.

6. Ask about e-filing

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Although there is nothing wrong with filing tax returns via snail mail (the U.S. Postal Service), look for a tax preparer who will file electronically. Doing so significantly reduces the amount of time you have to wait for your refund to arrive. It also lowers the risk of delivery problems or misdirected paperwork.

Incidentally, the IRS requires paid tax preparers who file more than 10 returns on behalf of clients each year to e-file their forms.

7. Find out what happens in the event of an audit

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Finally, pick a tax pro who isn’t going to be MIA in the event you get tagged for an audit. Not all tax preparers can represent you in front of the IRS. Be sure to find out which services your preparer is willing and able to provide.

Even if you don’t get audited, you don’t want a preparer who is going to file away their paperwork and hang up a “gone fishing” sign after this year’s tax filing deadline, April 17. Make sure your preparer will be available to answer questions and provide guidance even after the deadline has come and gone.

Regardless of whether you plan on DIY taxes or expect to hire a pro, stay with us at Money Talks News for more tips on how to maximize your refund and minimize the pain of tax time.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

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