Questions to Ask When Hiring a Tax Preparer

1040 form and calculator

This guest blog post comes from Esta Klatzkin, EA, a tax and financial consultant who specializes in providing tax accounting and financial services to Owner/Operators, contract haulers, and other long-distance truck drivers in the transportation industry. Learn more about Esta and her company, kNOw TAXES, by clicking here.

The key to finding the best tax preparer for you, as with hiring any professional, is to find out about more than just the prices. Here’s a list of questions you should ask anyone offering to prepare your taxes:

1. Do you have a PTIN (preparer tax identification number)?

Anyone who prepares federal tax returns for compensation must have a valid 20 L4 PTIN before preparing tax returns. Without a PTIN, the preparer is not allowed to prepare your return.

2. What is your tax background?

Take a look at the preparer’s business card and the letters after his or her name. Here’s a guide to what they mean:
An Enrolled Agent (EA) has earned the privilege of representing taxpayers before the Internal Revenue Service by either passing a three part comprehensive IRS test or through experience as a former IRS employee. EA status is the highest credential the IRS awards. EAs must adhere to ethical standards and complete 72 hours of continuing education courses every three years.

A certified public accountant (CPA) is certified by the state to act as a public accountant. A CPA is the only licensed qualification in accounting. To be certified, candidates are required to pass an exam.

3. Have you prepared a tax return for truckers before?

Tax preparers may focus on small businesses, corporations, partnerships, etc. There are as many variations as there are schedules and forms. But nobody can do it all.

4. Do you know the requirements of the states and localities where I am required to file?

Yes, federal income taxes know no boundaries- those rules don ‘t change from one state to the next. But that’s not true when it comes to states and localities. Make sure that your preparer knows – and can handle- all of those state and local filing requirements.

5. What records and other documentation will you need from me?

A reputable preparer should insist that you provide your forms W-2, 1099, 1098 and other verification of income and expenses in order to prepare a proper return. The tax preparer should provide a tax organizer. A tax preparer should be able to explain what will be needed for special schedules, forms or circumstances.

6. How do you determine your fees?

Prices may vary based on the complexity of your return, whether you require additional schedules, supporting forms or whether your return has “out of the ordinary” line items. Avoid preparers who base their fee on a percentage of your anticipated refund: they have a financial incentive to encourage them to create credits and deductions.

7. Can I file electronically?

It’s the fastest way to get your refund and tends to result in fewer math errors. It may also be required: a paid preparer who prepares and files more than ten client returns must file electronically unless client opts out.

8. Who will sign my return?

Remember that your preparer must have a PTlN. The PTlN and the preparer’s signature need to appear on your tax return. Don ‘t trust a preparer who refuses to sign a return. And be wary of any preparer or service who won ‘t tell you in advance who will actually be preparing the return.

9. When will I receive a copy of my return?

It’s not unreasonable to leave your preparer’s office without a copy of your completed return; assembly may be required. However, you should receive a complete copy of your return within a reasonable amount of time following your appointment. If your preparer can’t promise you a copy at all, run, you will need a copy for your own records. The law states that the preparer provide you with a copy.

10. How do I find you if l have a question or a problem after tax season is over?

Make sure that you know how to contact the tax preparer after your return has been filed. If your tax preparer won ‘t be around, consider taking your business elsewhere.

11. What happens if l get audited?

Nobody wants to think about an audit when filing a return. Find out how the tax preparer handles audits or examinations from IRS: will he or she respond to those questions? Represent you in front of the IRS or Tax Court? And what about the cost to fix any mistakes? How is that calculated?

Choosing a good tax preparer does require a bit of research and effort on your part but it’s worth it. Just as you stick with other professionals from year to year, the goal here isn’t just to fill out a form but to create a working relationship. A good tax preparer won’t mind answering your questions.