Many people have a fear of April 15th because they do not understand their tax return or how to make sure they have the right tax accountant. In this article I will explain things to look for in an accountant.
RETURN COMPLEXITY
The first thing you want to do before choosing an accountant is to assess the overall complexity of your own return. If your return consists of nothing more than a few W2 forms, mortgage interest, real estate taxes and some charitable contributions then you may be able to file it yourself using a program such as Turbo Tax or utilize the services of a tax preparation company such as H & R Block.
If your return has some more complicated items such as a sole proprietorship business, income from “S” corps, LLCs, partnerships, trusts, estates or some complicated investment items, then you most likely would benefit from the expertise of a professional tax preparer.
TAX PREPARER CREDENTIALS
As with anything else, not all tax preparers are created equal. Understand the credentials of your potential tax preparer. Are they a CPA or enrolled agent? Both CPAs and enrolled agents have passed certain tests in which they have demonstrated a certain level of proficiency of tax laws at a point in time. Both are also required to complete a certain number of continuing education hours each year in order to retain their accreditation. Do they have any additional accreditations such as a Masters degree in taxation? Again this would show that the preparer had to take certain classes focusing on complex tax issues.
TAX PREPARER EXPERIENCE
Think of tax preparers in some sense as doctors. Just as doctors have a variety of specialties (you wouldn’t go to a cardiologist to treat your broken leg) accountants have specialties as well. I know CPAs who specialize in financial statement audits and have very little tax knowledge at all. Some accountants may specialize in certain industries. If an accountant specializes in service businesses (doctors, lawyers, engineers, etc.) you may want to think twice about using him/her if you own a contracting business. Other things to consider are if you are a sole proprietor that works from home is the accountant well versed in home based businesses. Lastly, you want to know how many years the accountant has been practicing. If you have a complex return you probably do not want to use a tax preparer that has been practicing for only 2 or 3 years.
CONCLUSIONThis article gives a quick synopsis of some things I feel you should consider before choosing a tax preparer. Obviously if you know anyone who has dealt with a particular tax preparer and has a similar situation as you do that is another great way to find a preparer. Don’t ever be afraid to ask questions and interview your potential preparer.