Consumers have a wide range of choice when it comes to preparing their tax return. You can prepare a tax return using forms downloaded directly from the IRS, use tax preparation software from independent software publishers, or hire a professional tax preparer. You can even combine these choices, for example you could draft out your tax return on paper forms or using software before seeking out professional help.
When shopping for professional help, there's some simple things to bear in mind. First, starting this year tax preparers must be registered with the Internal Revenue Service if they are going to be preparing tax returns for a fee. All tax preparers must have an IRS-issued preparer identification number (called a PTIN). Eventually (but not yet), all professional tax preparers will need to have one of four credentials:
- Registered tax return preparer (this credential will be issued by the IRS after the tax preparer has passed a competency test and a background check, but the IRS has yet to issue any of these credentials)
- Enrolled agent (this credential is issued by the IRS to persons who have passed a rigorous competency test in taxation and passed a background check)
- Certified public accountant (persons holding the CPA credential have passed a rigorous test in accounting and are licensed to practice by state boards of accountancy)
- Tax attorneys rarely prepare tax returns, although some might. Tax attorneys hold a law degree (Juris Doctor) and may have a graduate degree in tax law (LL.M.).
Besides checking for credentials, you should also ask some basic questions, such if they have the skills and expertise needed to prepare your tax return, how they set their tax preparation fees (and what's included in their fee), what sort of privacy protections they adopt, and what what they think about your overall level of taxation.
Elsewhere on the Web:
- Robert Flach has posted a nice collection of 8 Questions to Ask Your Tax Preparer.
- Kerry Kerstetter has an excellent article on how to evaluate potential tax advisors.
Directories of Tax Preparers:
- The National Association of Enrolled Agents publishes a directory of enrolled agents who are a member of that association. Not all enrolled agents belong to the association, however, so this is not a comprehensive resources.
- The American Institute of Certified Public Accountants publishes a directory of certified public accountants. Be aware that not all CPAs prepare tax returns.
- The National Association of Tax Professionals publishes a directory of tax professionals who are members of that organization.