Selecting the right tax preparer could make the differencebetween sitting at home enjoying the advantages of a healthy tax refundor sitting in an IRS office, nervously explaining every expense youclaimed for the past five years.
There are different types of tax preparation professionals,with varying levels of experience and appropriateness to your personaltax situation, and they are not government-regulated. Anyone can printa business card and call himself a tax preparer.
Here's an overview of the types of tax preparationprofessionals and the questions to ask in order to choose the onethat's right for you.
- Tax preparer from chain or local outlets-- The professionals at the national tax preparation chains or similarbusinesses are trained to some extent, but their training andexperience could be at any level. Many of these preparers are paid notmuch more than minimum wage plus commission, and may be preparing taxreturns as a second job. If your return is a fairly simple one, such asa short form, then this could be an appropriately inexpensive option.These preparers can accompany you to a meeting with the InternalRevenue Service if the need arises to help you explain information onyour return. However, only enrolled agents, attorneys and CPAs havelegal standing to appear in place of a taxpayer at the IRS. If there isany complexity to your return, or tax situations specific to yourindustry, some of these preparers may not maximize those particulardeductions.
- Enrolled agent -- An enrolled agent islicensed by the federal government, and will be either a former IRSemployee or will have passed a comprehensive IRS exam. If there arequestions about your return, an enrolled agent can represent you withthe IRS. Many enrolled agents limit their work to a given tax area,however, so you should inquire about an agent's area of expertise. Youcan locate assistance through the NationalAssociation of Enrolled Agents Web site or at 800-424-4339.
- Certified public accountants -- A CPAhas passed a state's qualifying exam for accounting, but may or may notbe an expert on matters of taxation. The strength of a CPA is that theycan configure an overall tax plan and can guide you through complexfinancial situations. If you've recently been divorced, retired, openedor closed a new business, or had any other lifestyle changes thatsignificantly impacted your financial situation, a CPA may be your bestbet. However, if considering a CPA, be sure to ask about his or herexperience in tax matters, and how he or she keeps up with changes inthe tax law. Also, a CPA can represent you before the IRS. TheAmerican Institute of Certified Public Accountants' Web pagehas more information.
- Tax attorney -- A tax attorney may beyour choice if you are interested in sheltering part of your income, orif your situation involves complex corporate matters. A tax attorneymay be a specialist on the latest tax laws and in tax disputes, butless qualified in the preparation of actual returns, so inquire aboutexperience and knowledge in this area.
Bankrate.comis the Web's leading aggregator of information on financial productsincluding mortgages, credit cards, new and used automobile loans, moneymarket accounts, certificates of deposit, checking and ATM fees, homeequity loans and online banking fees. Visit Bankrate.comto get the tools and information that can help you make the bestfinancial decisions.
