By Tim Frye
When you are looking for a new tax preparer or advisor, the process can be tedious and nerve-wracking. After all, you are entrusting someone essentially with your life, because we all know how serious the IRS can be when it comes to collecting debts and spotting mistakes and penalizing accordingly. So when you are looking for an accountant the process should be meticulous, going through a list in order to safeguard yourself against falling into shady hands. This article will seek to define the best methods in finding a great tax preparer.
How to Spot a Bad Tax Preparer
Sometimes the best way to discover the right way to do something is to show the ways in which it can be done incorrectly. To help you find a great tax preparer, let us assist you in spotting some terrible traits among preparers so you can avoid them more easily.
There are many poor tax preparers, and they are not limited to certain cities or states. Many mean well, but are just so ill-informed that they may cause you to get audited all while thinking they are helping you within the legal limits. It is also difficult to tell if the person you are working with will be by your side and defend you if you do get audited in the future.
Here are some actions that characterize a bad tax preparer:
-Tax Preparer advises client to under or over report their income for the purposes of gaining the benefits of lower tax liability and greater size tax credits
-Tax preparer volunteers to inflate your deductions or even make up fraudulent deductions. Preparers who engage in such activity will sooner or later cause you to get that dreaded letter from the IRS stating you are being “examined”
-Preparer recommends you repurpose personal expenses as business expenses
-Preparers who encourage you to claim dependents you are not eligible for so you can claim very valuable Earned Income Credit and Child Tax Credit
How Can I Check if My Tax Preparer is Legitimate
While seeking to find ways to investigate into your tax preparer's legitimacy, you may be at a loss for source documents. Technically, you should not be getting tax advice from anyone who is not qualified to represent you before the IRS, so pretty much anyone who is not a registered tax preparer, CPA, or enrolled agent. Here are a few ways in which you can check on your tax advisor and make sure he or she is not a fugazzi:
-Call the Better Business Bureau to see if the preparers have had any issues with fraudulent behavior or upsetting clients by their actions
-In the case in which the preparer moonlights as a CPA you can call the American Institute Certified Public Accountants and ask them if your preparer has had any complaints levied against him for any fraudulent actions
-If the preparer is also an attorney, you can check with the appropriate state’s bar association
-Check with the IRS Office of Professional Responsibility for information on Enrolled Agents in the states that license or register tax preparers
How to Spot a Great Tax Preparer
Now let’s take a look at the specific behaviors that a superb tax preparer will tend to exhibit.
The IRS states that the most professional preparers will be the ones who request to see taxpayer receipts, and will inquire deeply into their clients eligibility for certain credits and deductions. These are the preparers that, even though at the time their questions may seem invasive and bothersome, have your best interest in mind. They are in fact helping you to avoid situations like the IRS audit or having extra penalties levied against you.
Seek a preparer who is experienced and has a niche developed in your particular area of business. This preparer is most likely going to have the knowledge of your most relevant and pertinent deductions, and can give you a specific, personalized form of service that will optimize your financial benefit.
Find a preparer with more than five years of experience, because it takes many years of doing taxes to get to the point where a person rarely makes mistakes and knows the maze like tax code like the back of his her hand.
Look for preparers who are around all year, and not just for a quarter of the year. If problems arise during the off season, which they often can and will, you are going to need somebody to lean on. You don’t want to take your issues to a new preparer who has to take more valuable time to get to know your personal situation.
Overall, the best way to find a tax preparer is to go to your friends and family, and see who they entrust to do their taxes.
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