With tax season underway, you don't want to delay looking for a tax professional. However, selecting the first preparer you find isn't a smart move either.
"It's important to connect with the right tax professional from the beginning," says Steven Janssen, tax director with financial firm CBIZ MHM in Tampa Bay, Florida. The best tax preparers do more than fill out forms. They may be able to identify areas of potential savings, assist in the event of an audit and provide year-round guidance and support.
Many people wonder: How do I find a good tax professional near me? To start, follow these five steps:
1. Understand your tax preparation needs.
2. Check with your network for referrals.
3. Confirm credentials.
4. Ask for an interview.
5. Look for red flags.
1. Understand Your Tax Preparation Needs
The first step to finding the best tax professional is to identify what services you need. Some people have basic tax returns while others may require a preparer who can handle complex tax situations and be available for consultation throughout the year.
Being a CPA, otherwise known as a certified public accountant, is no guarantee that someone is well-suited to manage your taxes either. "If you had a heart condition, you wouldn't go to a podiatrist," says Jeffrey Wood, CPA and partner at Lift Financial in South Jordan, Utah. Just as medical professionals specialize, so too do finance professionals.
Many CPAs focus primarily on audits, and those who do choose a career in tax may concentrate on a specific area such as individual, commercial or real estate taxes. Likewise, non-CPA tax preparers may have expertise in some types of returns and not others. "You want to find someone with the experience you need," Wood says.
2. Check With Your Network for Referrals
Once you understand the scope of service required, it's time to begin searching. The best place to do that is to ask others for a recommendation or referral.
"Based on your needs, find people in your network who have a similar profile," says Danielle Voloshin, CFP and wealth advisor at Miracle Mile Advisors in Los Angeles. That means talking to workers in a similar field or business owners in the same industry as you. A trusted attorney or insurance agent may also have connections with experienced tax professionals. This method is more time-consuming than going to a search engine and typing "tax services near me," but it can help ensure you are matched to a professional who is able to expertly handle your tax returns.
3. Confirm Credentials
At the very least, someone who is being paid to prepare taxes needs a preparer tax identification number -- or PTIN -- to file taxes with the IRS. However, almost anyone can receive a PTIN, and it is no guarantee that a preparer is good at their job or offers the services you need.
"There are tax preparers and there are tax professionals," Janssen says. Preparers, such as workers found at tax preparation chains like Jackson Hewitt and Liberty Tax, may be able to handle simple tax returns, but they aren't necessarily trained to provide in-depth tax guidance.
For more complex returns or for help with tax-minimizing strategies, look for an enrolled agent, CPA or tax attorney.
4. Ask for an Interview
You can learn a lot from online reviews, but nothing replaces a personal conversation. This is particularly important if you're looking for someone to partner with you for the long term.
Tax time is busy so don't expect a long conversation, but ask for a five- to 10-minute phone call at least. Then, get the following information if it is not readily available on the preparer's or professional's website:
-- How is data kept secure?
-- Do you charge a flat fee per form or an hourly rate?
-- How many returns do you complete a year?
-- Do you prepare all your own returns or do you have staff that assist?
-- Do you file returns electronically?
"If they are doing paper submissions, it's because they aren't doing very many (returns)," according to Wood. That may be a sign to keep looking, no matter how impeccable a person's credentials may be. "I would much rather have an enrolled agent who does taxes day in and day out than a CPA who does taxes as a side thing," Wood says.
5. Look for Red Flags
Not everyone who claims to be a tax preparer is legitimate. The following red flags could mean someone is incompetent at best or a criminal at worst.
Promises of an amazing return. As with much in life, if it sounds too good to be true, it probably is. Unless your income, family situation or the tax law has changed significantly, your refund should be similar from year to year. Be wary of anyone who says they can get you a refund far in excess of anything you've received in the past.
Refusal to sign a return. "If you prepare a return, you have to sign it," Janssen says. It's the law. Beware of anyone who refuses to sign a return, and don't include your signature until you see your preparer add his or her name first.
A temporary office or missing website. While some independent tax preparers work out of their homes, be careful about hiring someone who doesn't seem to have any permanent business presence. "If it's hard to find information, that's a big red flag," Voloshin says. Should you be audited or a have a question about your return later, you want to be assured the preparer will be easy to find.
Charging a fee based on your refund. Legitimate tax preparers will charge either an hourly or flat fee for their work. Assessing a charge based on the size of your refund is a violation of professional ethics, according to Janssen.