How to Choose a Tax Preparer

The wide world of tax pros Individual taxpayers find tax return preparation so confusing that many pay a professional to do it for them. But which tax preparer should you choose? Different types of tax preparation professionals have varying degrees of training and experience. A few states regulate tax preparers. The Internal Revenue Service also has begun a system to track and, in some cases, test tax preparers. But it is the responsibility of taxpayers to determine which tax pro is best for their personal tax situations. Read on to find out about your tax preparer choices.

IRS regulations on the way For years, anyone who wanted to prepare taxes could simply hang out a shingle and start filling out tax returns for a fee. Such operations include accountants, mom-and-pop tax preparation firms, and storefronts that pop up in January and close in April. While a few states have regulated tax preparers, there was no federal oversight in place until now. Starting in 2011, the IRS instituted a system to track every person who is paid to prepare and file returns and make sure they have at least a basic level of tax competence. The first step is issuance of a preparer tax identification number, or PTIN, to all preparers. Eventually, preparers must pass an exam. At that point, the tax pro will become an IRS Registered Tax Return Preparer. While the IRS oversight system is being phased in, make sure that your preparer has a PTIN. The IRS will not accept returns from preparers without an ID number. Also, ask the preparer for references and assurances that the office will be open after your return is filed in case you or the IRS have follow-up questions.

Chain tax franchises Tax preparation chains are popular choices for many taxpayers. The employee-preparers at each franchise office receive some pre-season tax training. They also use tax software to help guide them and their clients through returns. These tax preparation outlets work well for individuals who have relatively simple returns, want quick turnaround (and typically early refunds) and don't want to pay as much as other tax professionals charge. If, however, your tax situation is more complex -- for example, you own your own business or you have several types of income -- you might want to find a tax preparer who specializes in your type of filing situation.