When you first start out in the work field, your income and expenses are usually pretty straightforward and filling out a Form 1040 EZ is quick and easy. Things become more complex as you progress in your career and life and start thinking about starting a family, buying a home, and setting up college savings accounts. Then, it’s time to talk to a tax accountant who can help you plan for the future while making the most of your money. Here are some ideas and questions you should ask when looking for one.
What Are Your Credentials?
Those letters following the name of a preparer mean that he or she has studied tax issues and codes and has passed exams that qualify them for the work they do. Look for credentials such as Accredited Tax Preparer (ATP), Accredited Tax Advisor (ATA), Certified Public Accountant (CPA), Accredited Business Accountant (ABA), and Enrolled Agent (EA). Paid tax preparers are required to have a preparer tax identification number, so make sure they do.
How is My Personal Information Stored?
You will be sharing personal information, including name, age, address, bank account, and social security number, with your preparer?all the information needed to do your taxes. It’s also the information someone else needs to steal from you or assume your identity. Ask potential tax preparers how this information is protected, who has access to it, and how long it is stored.
How Do You Stay Current With Changes in Tax Law?
Tax professionals should be taking continuous education classes each year to learn about changes to both the national and state codes that may affect their clients. New laws can impact your health-care options, investments, and retirement accounts, just to name a few. Learn to be a tax accountant at MVU Online.
Do You Outsource Tax Preparation?
You should know just who it is that will be working on your tax returns. Many larger firms hire freelance CPAs and tax preparers to help during crunch time, beginning at the first of the year and leading up to the April 15 deadline for filing individual taxes. You should ask about the credentials of freelancers, too, and whether they take continuing education classes. Learn more about accounting at UAB Online.
What if I Get Audited?
Everyone dreads an IRS audit. In reality, they are rare, less than 1 percent, for individuals who make less than $200,000. With that said, audit protection is offered by some tax preparers and even larger firms if they prepare the initial return. The catch is that you must buy this protection in advance of the preparation itself, so you may be paying for something you don’t need. If you’re audited, you can still seek representation from many preparers for a fee, which may be less expensive than an attorney.
Most individual preparers and larger companies have adopted a code of ethics and standards set by the American Institute of CPAs. They cover reporting responsibilities, professional conduct, peer reviews, continuing education and more. It wouldn’t hurt to include a question about ethics when you’re interviewing tax preparers. After all, it’s your money they’re working with.