Last year, the Internal Revenue Service (IRS) audited over half a million tax returns. This year, it could be you: would you know what to do? A tax accountant would.
Tax accountants provide a range of services, including preparing and filing returns. They can ensure a smooth and secure filing process and help reduce the risk of an audit.
However, the alternative could be detrimental. Taxpayers are ultimately responsible for the information on their return. You could end up paying the price for the mistakes of an unqualified tax preparer.
Safeguard yourself by following these seven tips when choosing a tax accountant.
1. Check for Professional Credentials
Anyone with an IRS Preparer Tax Identification Number (PTIN) can prepare taxes. However, they will have different levels of expertise, knowledge, and skill. When hiring a tax accountant, ensure they have the proper credentials, which can include one of the following:
Certified Public Accountant (CPA)
A Tennessee resident wishing to attain an Initial CPA license must have a bachelor’s degree from an accredited university. This must include 150 semester hours of education, 30 of which must be in accounting and 24 in business. They also need to:
- Pass the Uniform CPA Exam
- Get 90% or higher in the ethics exam given by the American Institute of Certified Public Accountants (AICPA)
- Have one year of full-time experience in accounting
There is also the International Uniform CPA Qualification Examination (IQEX). It’s the equivalent for accounting professionals who are members of non-US professional associations.
Enrolled Agent (EA)
An Enrolled Agent is a tax practitioner with unlimited practice rights. It’s one of the higher credentials awarded by the IRS.
EAs must complete 72 hours of continuing education courses every three years. They must also adhere to ethical standards.
They can represent taxpayers before the IRS. However, they must pass an IRS test that covers individual and business tax returns. Alternatively, they must have experience as a former IRS employee.
Tax Attorney
Tax attorneys specialize in tax law. They provide their clients with legal advice on tax-related matters. They can also represent them in court.
Qualifications for a tax attorney include:
- A Bachelor’s degree
- Law school attendance
- A tax specialization
- Passing the state’s bar exam
Each discipline requires rigorous qualification requirements and ensures they have the skills to serve you competently.
2. Evaluate Experience and Expertise
Tax accountants are part of a specialized field. They have in-depth knowledge of tax laws, regulations, and rules. This includes the calculation of federal, state, and local taxes.
This is important when providing tax preparation services. However, having years of experience is also essential. Consider how long they have been providing these services before making a decision.
You may also want a tax accountant with specialized experience. Some accountants specialize in working with specific types of clients. They may work solely with small businesses or entrepreneurs or corporations. They will be familiar with relevant tax laws and regulations in these areas.
3. Assess Communication and Availability
Assess the communication style and availability of your shortlisted certified tax professionals. Multiple sources of income or deductions can make the filing process complicated. You’ll want someone who can help you understand what’s involved.
A clear and transparent communication style is best. You’ll want to feel comfortable enough to ask questions. They should be responsive to queries and concerns.
However, their availability can affect their response times. Many clients and limited staff resources may affect how they deal with your concerns.
Their workload may also affect their accuracy and timeliness. This can be an issue throughout the year. However, it is particularly concerning during tax season.
4. Consider Fees and Pricing Structure
Most tax consultancy services have a fee and pricing structure. It is usually calculated as an hourly rate or flat fee.
Some firms will charge based on the complexity of the returns or the services requested. This may also involve a flat fee with additional charges based on the work required.
Discuss the fee structure, then compare it with industry standards. Once you receive a quoted fee, ensure you understand what services are included.
5. Evaluate Reputation and Reviews
Clients are usually willing to share their great service experiences. See what they have to say by checking online reviews and ratings.
Referrals are also a great way to find a reputable tax accountant. These could be from family, friends, or colleagues.
Membership in professional organizations can help you better evaluate their reputation. Organizations such as the AICPA, the National Association of Tax Professionals (NATP), and the National Society of Enrolled Agents, all have conduct requirements and codes of ethics.
6. Inquire About Security and Privacy Measures
There have been cases of tax refund fraud schemes involving stolen identities. Hiring a reputable tax accountant helps you avoid this. However, their lack of effective security could make you an unsuspecting victim.
Discuss their data protection and confidentiality practices. Ensure they can securely transmit and store sensitive information. They should also comply with the state’s relevant privacy laws and regulations.
7. Assess Compatibility and Rapport
You’ll want to establish a long-term, trusting relationship, especially when sharing confidential information. Your tax accountant will need to know the ins and outs of your finances and be able to provide tax filing tips.
A good personality fit and an easy communication style helps this develop naturally. You’ll want to work with someone who shares your values and ethical standards. This could be a good indication of how they will deal with your affairs.
A Competent Tax Accountant to Safeguard Your Interests
The looming deadline during tax season can be stressful. This is further compacted, if your finances are not in order. Thankfully, hiring a tax accountant eliminates both of these issues.
However, you’ll want to ensure you hire someone reputable. It’s important to do your due diligence when choosing a tax accountant. Following the seven tips outlined in this article is a great way to start.
Miser Wealth Partners, LLC’s client-focused approach allows them to help you meet your financial goals. We listen to your needs and concerns and provide appropriate solutions. Visit our website to learn more about our financial management services.
