Skip to content

The Most Important Questions to Ask Your Tax Preparer

Written by prositesfinancialJan 15 • 3 minute read

tax questions

Although doing your taxes can save you money, it can also turn into a complicated and stressful process. As tax season approaches, it’s advisable to hire a professional tax preparer to help you. Their firm grasp of the complex tax code means you’ll fully comply with the IRS’s requirements.

They can also use their expertise to identify beneficial tax exemptions, credits, and deductions. Filing on time helps you avoid mistakes that some taxpayers make during the last-minute rush. Here are some of the most practical questions you should ask before hiring an expert tax preparer.

1. What is Your PTIN?

The IRS requires anyone who receives payment for preparing federal tax returns to have a Preparer Tax Identification Number (PTIN). All enrolled agents, CPAs, attorneys, and other qualified professionals must also renew their PTINs annually. The IRS has a public directory of tax preparers with professional credentials who also have a PTIN. You can search it by occupation, zip code, and last name.

This eight-digit number assures you that your taxes will be handled professionally and confidentially. Avoid potential tax preparers who don’t have one because that casts doubt on their credibility.

2. What Are Your Credentials?

The IRS has two categories of tax preparer qualifications, certified and noncertified. The first group has unlimited representation rights, and consists of enrolled agents, CPAs, and state-licensed attorneys.

Enrolled agents undergo regular suitability checks. They must pass a rigorous exam on tax planning, preparation, and representation. The program also requires them to complete continuing education every three years to stay conversant with the ever-evolving tax code. The three professions also have governing bodies that set ethical standards.

The second category covers limited representation rights. These are tax preparers who do not necessarily have professional credentials. They only help you file your taxes but can’t represent you before the IRS.

3. How Long Have You Been Preparing Returns?

Generally, the more experienced a tax preparer is, the higher the likelihood that they’ll do a good job. If they’ve been in the same location for years, that’s a sign of stability and trustworthiness. It’s advisable to hire one who understands your particular industry and its unique tax requirements. They know the exemptions you qualify for, as well as specific tax laws that affect your business.

Although individuals with little experience can also do an exceptional job, they should probably work under a more experienced colleague. Watch out for those who keep moving, withhold information, or have low ratings on BBB. They could either scam you or do a shoddy job that will get you in trouble with the IRS.

4. How Do You Determine Fees? Can I Get an Estimate?

The IRS advises you to avoid agents who calculate their fees as a percentage of your total refund. That’s because it encourages some to provide dishonest figures to increase their earnings. You’ll also remain clueless about the actual amount until you file the returns. A sincere professional should, at the very least, give you a range of how much you should pay.

Some may charge depending on the type of forms you’ll need during the filing process. Your past returns should also provide a reliable guide on how much you should pay this year.

5. What Information Do You Need from Me?

Your preparer should ask you for the following information:

Social security details: It’s essential for the system to accurately capture your identification numbers and names alongside those of your dependents. Providing them reduces or eliminates misspellings and other errors that could cause problems with the IRS. These documents include social security cards, passports, state identification cards, and driver’s licenses.

Income statements: Other than salaries and business earnings, additional income includes gambling winnings, insurance contracts, and annuity.

Proof of other forms of income: You’ll need to file a variation of Form 1099 for miscellaneous income such as broker’s fees, home sales, and dividends.

Tax deduction details: These deductions reduce your taxable income and, ultimately, your tax amount. The documents include your mortgage interest statement, donations, and interest on student loans.

Proof of expenses: Medical bills, IRA contributions, and some education spending are examples of personal tax-deductible expenditures. Business expenses include mileage, depreciation on property, and home office costs.

If you’re due for a refund, ensure you receive the check or bank deposit. Be wary of preparers who suggest or insist on routing it through their office.

Other Questions That You May Want to Ask

Due to unique tax needs, you might have more questions for your tax preparer, such as:

  • Do you keep up with updated tax laws?
  • Do you offer electronic filing?
  • When can I receive my completed tax returns?
  • Are you insured or bonded?
  • Do you outsource your work?
  • How will you assist if the IRS audits me?
  • Will you keep my tax information? If yes, for how long?

An ideal tax preparation expert is one who answers all your questions honestly, patiently, and comprehensively. Take the time to find a tax preparer with the expertise and credentials you need. This will prevent overpaying for services you don’t need or choosing someone who is not qualified to handle your situation.

Ready to make the
jump to better finances?

Click here to access our financial guide
and start practicing better habits for life.

%d bloggers like this: