Types of Tax Preparers

 

Tax preparers are many out there, but they are not all created equal. They can vary significantly in terms of expertise and, of course, charges. In any case, you should hire a tax preparer who can handle your documents well and save you some cash at the same time.

If you're looking for a professional to handle your returns, here are

 

1. Certified Public Accountants (CPAs)

 

Note that not all CPAs work with individual income Tax Returns, so make sure to ask from the beginning. To find a CPA, check with friends and neighbors or go to the American Institute of Certified Public Accountants website.

 

2. Enrolled Agents

 

Enrolled agents are like CPAs. They handle different types of financial activities, but their main focus is taxes. To become an EA, a person should have worked for a minimum of 5 years at the IRS or passed tests covering tax calculations and codes. Either they work independently, in a storefront office or a CPA firm. To find an EA, you can visit the National Association of Enrolled Agents website.

 

3. National Preparers

 

If your tax returns are fairly simple, you can go with a storefront operation. Preparers in these national chains have usually completed courses running for a minimum of weeks, and neophytes are under the supervision of more experienced members of the staff.

 

4. Free Preparers

 

If you have a household income that is within the low to moderate range, or if you're at least 60 years old, you may be exempt from tax preparation fees. You can consult the AARP Foundation Tax-Aide service which can assign you a trained volunteer who can help you with your schedules A and B and Form 1040. For more facts about tax returns, you may also want to visit http://www.mahalo.com/how-to-do-your-taxes-online.

 

Before making a commitment with any tax preparer, don't forget to ask a few basic questions. For example, do they have a PTIN (preparer tax ID number)? What are their credentials and what types of clients do they mostly have? How much do they charge? Can they help when you with an audit?

 

As a rule, you'd like to hire someone who has been in the industry for no less than seven years. This is probably a person or firm that has been exposed to a myriad of tax scenarios, during both the good and the bad economic episodes.

 

Tax return preparers you should avoid are those who pocket a portion of their clients' refunds, collect ridiculously high fees, and make refund guarantees. The IRS itself has compiled a list of warning signs, including a preparer who doesn't sign the return, doesn't give you a copy of your return, offers to give you a bigger refund, takes a portion of your refund, proposes that you divide the refund as payment for the service, adds forms you've never filed in the past, and convinces you to enter incorrect information on your documents.