Finding a GREAT tax preparer

Monday, February 9th, 2009

So how do you find a GREAT tax preparer?  It can be tricky…do you go with a chain location? Or how about an independent? Or someone doing taxes “on the side” and “on the cheap”?  And how do you figure out if they are any good or not?  Here’s a list of do’s and don’ts when it comes to finding your very own tax preparer:

DON’T go to a preparer who gets paid by receiving a percentage of your refund.  This is not only unethical, but in many places it is illegal.  And what happens if you owe money?  Do they pay YOU for the privilege of doing your return?  I don’t think so. 

DO ask in advance approximately how much they think it will cost to prepare.  Some preparers charge by the hour, some by the form, and some on a flat fee basis.  All are acceptable ways of paying your preparer.  Personally, I prefer to charge on a flat fee basis, because then there are no surprises for my clients when their returns are ready.  If your preparer charges hourly, be sure to request to be contacted if your return takes longer than expected.  This way, you won’t be expecting it to cost $350 and then it ends up being $550 due to a complication.

In addition, if your preparer charges hourly, beware: if you like to chat, it may be considered time “on the clock” and run up your bill.  So if you meet with or call your preparer, be sure to stay “on point” during your conversation to keep your costs down.

DON’T agree to a Refund Anticipation Loan (a.k.a. RAL).  Otherwise respectable preparers and chain tax prep shops offer this set-up that is a losing deal for the taxpayer.  It is a short-term, super high interest loan.  Instead, have your return E-filed and the refund direct deposited in your bank account.  A federal refund handled this way can show up in your bank account in as little as 7 days, though 10 – 14 days is more likely.  The State of CT can be even faster–prior years’ experience has shown me that CT can turn it around in one week or less–but that’s not always the case so don’t hold me to it.

DO choose a preparer who asks you a lot of questions.  One that also provides you a “tax organizer” is even better.  These are preparers who take the time to find out about you and see which well-known and little-known deductions may apply and can save you money.  It will also save everyone time by getting your information organized in and in good order.  You don’t want a preparer who just takes your envelope full of papers and just inputs them.

DO be aware that different tax preparers are held to different standards.  Preparers that have EA (Enrolled Agent) or CPA (Certified Public Accountant) after their names are held to higher professional standards (such as IRS’s Circular 230), including fines, penalties, etc. and also require annual Continuing Education to stay up-to-date on the latest tax law changes.  That doesn’t mean “undesignated” tax professionals can’t be as good or better, but be aware of the differences.

DO ask your preparer what kind of Continuing Education courses they take. You definitely want someone who stays in tune with all of the various federal, state, and tax law changes that could apply to you, no matter what their designations. 

DO use a professional association to find a preparer if you are shopping for one.  The National Association of Tax Professionals (www.natptax.com) and the National Association of Enrolled Agents (www.naea.org) are great places to start. 

Next week, I’ll address some deductions that you’ll want to know about for this year’s tax return…to save you some money and time!

Copyright 2008-2009 Kristin Delfau, author of Turbo-Mom's Guide to Saving Money Without Wasting Time a womens' personal finance book, and Aji Publishing.

Tags: NAEA, NATP, RALs, tax preparers, taxes
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