Experience

• How many years have they been in doing taxes?
• Do they have any entrepreneurial experience themselves?
• Do they have financial experience that may help you, e.g. debt restructuring, estate or retirement planning?
• How many audits have they managed? What was the outcome? If your tax return is audited, knowing the audit process and being able to manage the audit helps to provide a successful outcome.

Credentials

• Does your tax preparer have a college degree?
• Is your tax preparer a CPA, an EA or have other advanced degrees?
• Have they had both public accounting and private industry experience? How many years experience?
• Do they have any other professional affiliations or membership in organizations such as the Institute for Professionals in Taxation or Tax Executives Institute?
• Have they taught taxation or done presentations to tax or finance professionals

Focus

Many industries have specialized needs or categories for deductions.

• Are they familiar with your industry’s specific requirements?
• What experience have they had with your industry or field?

Continuing Education

There could be as many as 500 to 1,000 changes to the tax code every year, so all tax professionals need to keep themselves current.

• How do they stay updated with changes in the law?
• What tax research software do they subscribe to?
• Do they read other professional publications, e.g. Wall Street Journal, CFO magazine?
• How many continuing professional education credits (CPEs) do they get each year?
• Do they update you about changes in the tax law?
• If you do business in states other than your home state, make sure the tax preparer understands the laws of your state.

Professional Style

Some preparers are conservative, always opting on the side of caution, and others are more willing to make the judgment call.

• Conservative returns will provide smaller refunds but less chance of audit; more aggressive will increase your deductions and therefore your refund, but may also increase your chance of having to face the IRS.
• The ideal preparer is probably somewhere in the middle and can conform to your acceptable level of risk. Make sure the preparer’s philosophy coincides with yours.
• Do they communicate with other professionals handling your finances?

Availability & Cost

• Make sure the preparer will be available for assistance year round. The IRS doesn’t take summers off.
• If your taxes are simple, H&R Block or Jackson Hewitt’s inexpensive service – or preparing the return yourself – may do just fine.
• If your tax situation is more complex, a few dollars spent now may save you many dollars down the line.

Verification Methodology

• What safeguards do they have in place to check for accuracy?
• Do they have a qualified person who double-checks returns?
• What tax software do they use?

What to avoid

There are several red flags when speaking to a tax preparer. If you sense any of these situations exist, run.

• If a preparer tries to set your fee depending on the amount of your return, that’s a red flag and may be illegal. They can, however, charge according to the complexity of your return. In that case, they should be able to give at least a rough estimate of charges in advance. Don’t be afraid to ask what their fees are based on.
• If they guarantee you a refund before even learning of your specific tax situation.
• If they ask you to sign a blank tax form, you have no way of knowing what is actually filed. Remember you are ultimately responsible for what is on your tax return.
• If they refuse to sign your return.