Taxes
Taxes/Homeownership

Getting Tax Help: Tips on Finding a Tax Professional

by Nancy Osborne, COO of ERATE®

If you have ample time on your hands and are fairly good with numbers and details, then you are likely in a position to prepare your own tax returns and do your own tax planning.  Completing your taxes on your own will spare you the expense of paying someone else to get the job done and hopefully you'll become more proficient at preparing your returns as the years progress.  However many of us do not have the time, patience or the ability to do our own taxes.  Fortunately there are many options available to taxpayers in the way of professional help.  Individual tax preparers and advisors come with varying degrees of education, experience and credentials resulting in a wide range of fees for their services.  As in most cases involving professional services, you want to find the lowest cost provider who has the necessary skill to get the job done right.  The following tips should lead you down the right track in finding the best tax professional for your situation:

• Compensation – First and foremost know how your tax preparer is going to be compensated.  Compensation may occur on an hourly basis, by way of a flat fee for service provided or could be based on a percentage of your return.  You should know what the form of compensation will be so you can guard against any type of potentially self-serving advice resulting from unintentional financial incentives your tax advisor may have.  Be leery of tax preparers who may claim they can achieve a larger refund for you than other preparers.    Also avoid using a tax preparer who guarantees results or who bases their fee on a percentage of your refund (essentially a contingency fee, which is not permitted).

• Qualifications - Be sure you understand your tax preparer's qualifications and credentials.  Any paid preparer is required by law to sign the return and complete the preparer section, however the taxpayer is the one who is legally responsible for what appears on their return even when it is prepared by someone else.  An unqualified preparer may overlook legitimate deductions or credits which could cause you to pay more in taxes than you should or even worse they could make serious errors in preparing your return which could result in costly penalties, deficiencies and interest levied against you, the taxpayer.  Determine whether the potential preparer is affiliated with a professional organization that requires continuing education as well as mandating that they comply with a code of ethics. Check on your tax preparer's status with the following organizations: for CPAs, the State's Board of Accountancy and for Enrolled Agents, the IRS Office of Professional Responsibility (OPR) and for Tax Attorney's the State Bar Association.  See the suggested links at the end of this article.

• Interview Process - Ask around and do not select the first advisor you speak with, do some checking first.  It is a good idea to speak with at least 3-5 tax professionals before deciding upon one individual.  A meeting in person is advisable and if your potential hire is a true professional they should be willing to spend adequate time with you addressing your concerns and answering your questions (assuming you do not attempt to seek an appointment during the height of the tax season).  Reputable preparers will also have their own questions of you in the interview process.  Also choose a preparer who is easy to contact and will be responsive to your inquiries.  It is very important to ask who specifically will be preparing your return and to be certain of that individual's qualifications.  You also want to be sure that preparation of your return will not be outsourced overseas as many foreign countries do not have the privacy and security laws that exist in the U.S.

Below are examples of tax professionals available to help you whatever your tax problem may be.  Review each one carefully and select the one that best fits your tax consulting needs at the most effective cost.

Tax Attorneys

Tax attorneys are for those taxpayers with very complicated financial situations and tax problems that have a legal element to them.  Tax attorneys typically work in an advisory capacity assisting other tax preparers and do not usually complete tax returns.  Attorneys of course have graduated from law school and must pass the state bar exam.  Because attorneys typically have the highest billable rate, this type of assistance is usually sought out by high income earners with complex tax problems.  The typical hourly rate for an attorney is approximately $300.

 

Certified Public Accountants (CPA)

Becoming a CPA requires a substantial amount of training in addition to passing a rigorous exam in order to earn a CPA credential.  CPAs belong to a professional association which requires that they complete continuing education units.  Their fees can vary tremendously based on their level of experience and expertise, however they are normally less costly than tax attorneys.  The typical hourly rate for a CPA is approximately $100.

 

Enrolled Agents (EA)

To become an enrolled agent requires an extensive IRS examination.  Continuing education is also required and EAs are permitted to represent you in front of the IRS in the event of an audit.  They are typically suited for the taxpayer with a moderately complicated return and can be very knowledgeable in areas of taxation because that is their exclusive focus.  Their fee range is less than that of tax attorneys and CPAs and is typically a flat $200-$300 to prepare a return.

 

Certified Financial Planners (CFP)

The certified financial planner does not have the same credentials as a CPA, however for their own financial planning clients CFPs can be a helpful source for tax assistance and preparation because they know the in and outs of their clients overall financial picture.  You always want to make sure that you have selected the most qualified of CFPs to assist you with your financial planning and of course the same principal applies when you allow your CFP to complete your tax return.  CFPs must be licensed by Certified Financial Planners Board of Standards, Inc. (CFP Board) look for the accreditation (CFP) next to your planner's name.  Standard hourly rates for CFPs are around $75-$100.

 

Preparers

The tax preparer is generally the tax professional with the least amount of formal training and is not required to have any type of license.  An experienced preparer can be helpful to those with relatively simple returns who do not have the time, patience or ability to complete their return on their own (even with the help of tax-preparation software).  They are usually the least expensive option of all tax professionals.

 

 

Useful Links to Help Locate a Tax Professional in Your Area:

American Bar Association (ABA) for Tax Attorneys:
http://www.abanet.org/lawyerlocator/searchlawyer.html

Certified Financial Planners (CFP):
http://www.cfp.net/search/

Certified Public Accountants (CPAs):
http://www.aicpa.org/Consumer+Information/Find+a+CPA/

Enrolled Agents (EA):
http://www.naea.org/memberportal/resources/fortaxpayers/agentsearch.htm

IRS e-file Providers (preparers who are IRS authorized to file your return electronically)
http://www.irs.gov/efile/article/0,,id=118449,00.html

IRS Tips on Selecting a Tax Preparer:
http://www.irs.gov/individuals/article/0,,id=133088,00.html

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Nancy Osborne has had experience in the mortgage business for over 20 years and is a founder of both ERATE, where she is currently the COO and Progressive Capital Funding, where she served as President. She has held real estate licenses in several states and has received both the national Certified Mortgage Consultant and Certified Residential Mortgage Specialist designations. Ms. Osborne is also a primary contributing writer and content developer for ERATE.

"I am addicted to Bloomberg TV" says Nancy.

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