Taxes are a tricky business, which is why it’s often best to leave tax prep to qualified professionals. But finding someone you can trust to handle such a vital part of your financial health can be equally as complicated. When searching for a tax professional, what qualities should you seek out, and how?
Ask for help from your network
Personal recommendations go a long way, especially if those recommendations come from family, friends and coworkers whom you trust, according to Kiplinger.com Online Editor Cameron Huddleston. If your trusted sources are far away, Huddleston suggests reviewing the Accreditation Council for Accountancy and Taxation Website or contacting your state’s CPA society for tax professional referrals.
“…Narrow your list of recommended tax preparers down to two or three candidates, who you will then call or visit for an interview,” advises Huddleston.
Even if a referral comes from your best friend, make sure you do your due diligence and vet their recommended tax professional’s credentials and licensing. Since many unqualified and unlicensed tax professionals surface during tax season, it’s important that you seek out an enrolled agent, according to Kiplinger.com Contributing Editor Kimberly Lankford.
“Enrolled agents are tax experts who must pass a rigorous test, meet annual continuing-education requirements, and who are licensed to represent clients in front of the IRS,” explains Lankford. “Enrolled agents can prepare your income-tax return, and some provide tax-planning advice. You can also contact an enrolled agent if you need help after receiving a penalty letter from the IRS.” Lankford also advises you to find a certified public accountant (CPA) who is also qualified as a personal financial specialist (PFS) if your tax needs overflow into financial planning.
In addition to reviewing the licensing, credentials, experience, specialties and degrees of your potential tax professional, NerdWallet.com writer Tina Orem recommends taking a look at the company they keep.
“Membership in a professional organization such as the National Association of Tax Professionals, the National Association of Enrolled Agents, the American Institute of Certified Public Accountants or the American Academy of Attorney CPAs is always a good thing to have, as most have codes of ethics, professional conduct requirements and various certification programs,” reports Orem.
Trust your instincts
Just because you feel unqualified to handle your tax prep on your own doesn’t mean your instincts about a tax professional are unfounded. If you sense something is off when interviewing a tax professional, it probably is, especially when the conversation is about fees.
“Legitimate tax preparers often charge by the hour, so if you come across one whose fee is based on the size of your refund or who says he or she can get you a bigger refund than the next guy, those are red flags,” warns Orem.
Look for engagement
You want the tax professionals and financial advisors working with you to be excited and engaged by their trade, according to Investopedia.com writer Craig Anthony.
“This is important because standards, laws, methodologies and products within the financial and investment worlds are constantly evolving,” reports Anthony. “When a financial advisor has a huge passion for the subject matter, that person naturally gravitates toward learning more and more about the industry every day.”
Tax preparation is an extremely analytical and complicated endeavor that requires a highly qualified tax professional. Don’t let just anyone handle your money—take the time to find someone you trust.