10 Questions to Ask - Finding a Tax Preparer
Finding the right tax preparer for your individual or business needs might take a little more leg work upfront, but you will benefit from the result for years.
When it comes to getting a tax preparer, you get what you pay for. This is not someone you want with a "Fake it til I make it" attitude. Nor do you want someone who focuses on churning out a mass number of returns and foregoes attention to detail.
Depending on what your needs are, a different preparer than your parents, colleague, or neighbor may be a better fit for you!
Note that the time to search for a new tax preparer is not February, March or April! You will not get the time you need to ask these questions during the crunch time of tax season. You may be lucky to find someone who is accepting new clients at all.
May - January is a great time to get to know your tax preparer and find the right fit!
First, what do you need from your tax preparer?
Do you need someone to only file your taxes? Are you looking for a tax expert to provide strategy, goals, tax savings recommendations and/or implementation of those strategies?
Do you need a preparer for individual tax returns, knows real estate, partnership or business tax returns, trust and estate taxes, farming, help to resolve a tax notice with the IRS, help setting up an installment payment plan, knowledge in multiple states, foreign assets, foreign taxes, etc?
With the extensive tax code that continues to evolve and change, it is impossible for a tax preparer to have in-depth knowledge in all areas of tax. As such, many specialize.
For example, many trust and estate tax preparers only do trust and estate taxes. The same goes for foreign assets and foreign tax reporting. Some specialize in individual taxes, while others specialize in business taxes.
Regardless of what you are looking for, tax preparers do more than just key-enter your tax return. With the continuous changes to tax code, laws and bills, great tax preparers are diligent in staying up-to-date on tax code changes, can optimize your tax savings and help you mitigate areas that will flag you with the IRS.
It's not just about data entry of numbers, but understanding what those numbers mean, what elections make sense, what is specific and required by your unique situation, understanding how the tax code works for and against you, and how those implementations, deductions and reporting of items ultimately flow through to the bottom line of your tax return.
It is important to note that in addition to federal taxes, state taxes vary drastically. As such, we always recommend trying to find someone who also lives in or knows your state tax code as well.
At the end of the day, you want a qualified tax preparer and tax specialist filing your taxes who is up-to-date on the latest tax changes and red flags that can trigger an audit in the specific areas that relate to your needs.
How to start the search
The best way to find a great tax preparer is to ask colleagues and friends for referrals. You will receive very honest answers and know what to expect upfront.
Google is a great tool to search for CPA or tax preparer near me. Read the Google reviews!
We highly recommend against getting tax advice from Facebook...and let's not even dive into TikTok... that said, your local area Facebook groups are a great place to ask others for recommendations of tax preparers.
If you have a specific niche, let's say airbnb rentals, you may want to find a tax preparer who specializes in this area. This is a great example of when you can ask your network of airbnb hosts for who they use.
Don't forget your professional network. Do you have an attorney, business banker, realtor, wealth manager, etc? They likely have other professionals they work with and can recommend.
Make a list.
Reach out! Go to their website and submit an inquiry, call or send an email.
Certifications: EA vs. CPA
A great first qualifier is to find out the certifications of the tax preparer. CPAs and EAs can both prepare your tax return and represent you with the IRS.
Certified Public Accountants (CPA) are certified and licensed by the state to perform a wide range of accounting services, including accounting, preparation engagement, management advisory, financial advisory, tax, and consulting services. The CPA license is issued by a state licensing board but authorizes the performing of these services to all states.
As such, some CPAs prepare taxes, but not all CPAs prepare taxes as they are licensed in multiple areas and may instead focus on accounting, audit or consulting.
Enrolled Agents (EA) are federally-licensed tax professionals who specialize in tax preparation and have unlimited rights to represent taxpayers before the IRS.
As such, all EAs prepare taxes.
Both licenses require extensive education, the passing of a rigorous exam, and also require continued education annually.
There are others out there preparing taxes, but have not gone through the training and passed the certification tests, and may have limitations on what services they can offer you. Without an EA or CPA, you may ask "why" someone presenting themselves as a tax preparer... why they haven't pursued one of these certifications.
10 Questions to Ask
We highly recommend you interview potential tax preparers as they are not all specialized in areas. They will likely have similar questions for you. The goal is to find the right FIT for both of you.
After you get your list, the first question you need to ask is if the tax preparer is accepting new clients. In today's market, that may be the first disqualifier. For preparers accepting new clients, here are some questions that may help you find YOUR right fit.
- Are you familiar with [insert your needs (i.e. working remote, airbnbs, online sales, sales tax, real estate, e-commerce, retail, stock options, truck drivers, farm and ranching, traveling nurses, foreign tax, EXPAT, military, etc)]?
- Do you have experience filing taxes for [insert your needs (individuals, small businesses, LLCs, C-Corps, S-Corps, Partnerships, Trusts, Non-Profits, foreign entities, etc)]?
- What are your tax return base prices (individual, s corp, partnership, trust, gift tax, tax resolution)?
- How long have you been in business? Are you a CPA or EA?
- Will you be preparing my return or do you have others on your team?
- How does your process work? Do we meet in person? Do you have an online client portal? How do we communicate?
- How can I best prepare for the upcoming tax season?
- Do you represent me in case of an audit?
- Do you provide in-person or virtual tax return appointments?
- Do you provide tax monitoring services? payroll? bookkeeping?
Summary
Finding the best fit for you may take some leg work and due diligence. But the payoff will not only come from your ease of mind but also be evident in the amount of taxes you pay...and really the amount in taxes you save.
What works for you may not work for others and vice versa. You may be ok with a preparer who only does remote work and doesn't offer in-person appointments, while that may be a disqualifier for the next person.
Be upfront with what you understand to be your tax needs to make sure that not only your tax preparer is a good fit for you, but that you are also a good fit for their areas of expertise!
