When hiring an individual or CPA firm to prepare a tax return, filers need to understand who they're choosing and what important questions to ask.
A taxpayer's needs will determine which kind of preparer is best for them. Whether taxpayers regularly use a tax professional to help them file a tax return, or have decided to work with one for the first time, choosing a tax professional is important. Taxpayers are ultimately responsible for all the information on their income tax return, regardless of who prepares the return.
Warning Signs
By law, anyone who is paid to prepare or assists in preparing federal tax returns must have a valid Preparer Tax Identification Number. Paid preparers must sign and include their PTIN on any tax return they prepare.
Not signing a return is a red flag that the paid preparer may be looking to make a quick profit by promising a big refund or charging fees based on the size of the refund. Taxpayers should avoid these unethical "ghost" tax return preparers.
A ghost preparer is someone who doesn't sign the tax returns they prepare. Unscrupulous ghost preparers often print the return and have the taxpayer sign and mail it to the IRS. For electronically filed returns, a ghost preparer will prepare the tax return but refuse to digitally sign it as the paid preparer.
Tips for selecting a qualified CPA for your tax returns
Here are some tips to keep in mind when choosing a Certified Public Accountant (CPA) for your tax returns:
- Look for a preparer who's available year-round. If questions come up about a tax return, taxpayers may need to contact the preparer after the filing season is over.
- Review the preparer's history. Look for disciplinary actions and the license status for credentialed preparers. For CPAs, check the State Board of Accountancy's website, and for attorneys check with the State Bar Association.
- Ask about service fees. Taxpayers should avoid tax return preparers who base their fees on a percentage of the refund or who offer to deposit all or part of the refund into their own financial accounts. Be wary of tax return preparers who claim they can get larger refunds than their competitors.
- Provide records and receipts. Good CPAs ask to see these documents. They'll also ask questions to determine the client's total income, deductions, tax credits, and other items. Do not hire a preparer who e-files a tax return using a pay stub instead of a Form W-2. This is against IRS e-file rules.
- Understand the preparer's credentials and qualifications. Attorneys, CPAs, and enrolled agents can represent any client before the IRS in any situation. Annual Filing Season Program participants may represent taxpayers in limited situations if they prepared and signed the tax return.
- Never sign a blank or incomplete return. Taxpayers are responsible for filing a complete and correct tax return.
- Review the tax return before signing it. Be sure to ask questions if something is not clear or appears inaccurate. Any refund should go directly to the taxpayer – not to the preparer's bank account. Review the routing and bank account number on the completed return and make sure it's accurate.
At H&CO we have trusted CPAs
Our CPA firm has over 30 years of experience preparing tax returns for global families and multinational organizations. Do not hesitate to request a consultation with our certified experts!
