Did you know about one third of us hire a tax accountant or other tax professional to file our tax returns? And yet, it turns out most of us don’t know much about what we should be looking for when we hire them.
80% of people who use a tax accountant or other tax pro never ask them about their credentials at all! That’s pretty surprising, especially since you’ll be sharing everything with them from your income to your bank accounts, to your Social Security number and more.
Do You Need An Accountant At All?
When you’re thinking through the process of finding the right tax accountant for you, it helps to consider what you’ll need the accountant to do for you.
To get you started, here are some common reasons you might need an accountant:
- To ensure the accuracy of your tax returns.
- To save time (not to mention stress).
- You’ve got a complex tax situation on your hands and you need specialized advice – for this year and for the future, too. Maybe you’ve started a business, invested in the stock market, purchased rental property, moved outside the U.S, or had something else come up that’s making tax time a bit more complicated.
- You know you need to file back taxes, pay off a tax debt, or maybe you’re being audited.
Which Type Of Tax Pro Should You Hire?
Certified public accountants (CPAs) have passed the CPA exam, are licensed by the state, and often specialize in one area of accounting. A CPA can represent you before the IRS in the event of audit or collections. Keep in mind not all CPAs handle tax issues.
Enrolled agents (EAs) have also passed thorough testing and IRS background checks. EAs can be ideal for complex tax situations since they often specialize their practices. They can also serve as your representative before the IRS for an audit or collections issues.
Tax attorneys are lawyers specializing in tax law usually with a master of laws degree in taxation (an LL.M.) in addition to a juris doctor (J.D.) degree. Attorneys are great for complex legal matters like preparing estate tax returns or an appearance before the U.S. Tax Court, for example.
How To Find An Accountant
Regardless of who you decide to hire, you’ll want an accountant who has handled tax situations similar to your own.
Referrals are your best bet, and it’s especially helpful to ask someone who has a tax situation that’s similar to your own. Other great sources of referrals include family, friends, business owners, financial advisors and attorneys.
Watch out for any accountants who guarantee large refunds or make other promises that quite don’t add up.
Do you have a straightforward tax return? Retail tax franchises like H&R Block, Jackson Hewitt and Liberty Tax Service might be a great fit. Ask if you can meet with a CPA, an EA, or other senior tax preparer. You’ll usually pay the same price, but you’ll work with a more seasoned tax pro.
Interviewing Your Accountant: A Checklist
Accountants and other tax professionals are required to follow federal and state regulations. But there are still several questions you can ask to help you you find someone who is both experienced and reliable.
Be sure to ask your prospective tax accountant:
- How long have you been in the tax preparation business?
- What licenses or other designations do you have?
- Do you specialize in any particular tax issues?
- What are your fees?
- How long will it take you to finish my taxes?
- Do you outsource any work or take care of it all yourself?
If all goes well during the interview, you’ll want to contact your state’s board of accountancy to check the status of the tax professional’s license and find out if there are any disciplinary issues. You can also ask the IRS Office of Professional Responsibility if an EA has been subject to disciplinary action.
Feel Confident About Your Decision
Remember that when it comes to choosing your accountant or other tax professional, never settle for someone who doesn’t make you feel completely comfortable. Keep searching if you need to! Tax season can feel stressful, but having the the right accountant in your corner can help you feel much more relaxed.
*Disclaimer: Citywide Home Loans does not accounting services or any other service apart from lending. You should always consult with your legal, tax and financial advisors to determine which strategy is the most suitable for your specific circumstances.