How to Choose a Tax Preparer

Tax season may only come once a year, but that due date always seems to come sooner than you expect. And, unfortunately, it’s not always easy to navigate the tax code and ensure that you are filing your taxes correctly and at maximum benefit to you. If you have any doubts or just don’t want to deal with the hassle, then it’s smart to just go ahead and hire a tax preparer.   

Before you do that, however, you’ll want to keep in mind that not all tax preparers are created equally and that you need to be selective about the person that you hire. The wrong adviser can end up making things worse, not better. Fortunately, though, choosing a good, knowledgeable tax preparer is easy, if you know how to go about it.

Qualifications Count

First things first, you want to make sure that the person you are hiring or thinking of hiring is actually qualified to handle your taxes in the first place. All legitimate tax preparers must have a preparer tax identification number (PTIN) that they should disclose to you without any problems. If a preparer doesn’t have or won’t disclose this number, steer clear.

You should also look for a tax preparer that has the necessary certifications within his chosen specialization area and that ideally belongs to a professional organization that holds its members to high ethical and educational standards.

Affordability

The whole point of hiring a tax preparer in the first place is to try and save some money.  Obviously, that’s not going to happen if your preparer is charging you an arm and a leg! Thus, find someone qualified but also someone who charges reasonable fees, typically no more than around $150 for a basic tax return.

Try and avoid preparers who make their money by taking a percentage of your income taxes since these preparers can sometimes be dishonest and may “fluff up” returns to get more profit, which could land you in some serious hot water!

Also, make sure that you know the fees AHEAD of time so that you don’t get trapped into paying unexpected fees.

Book Early!

As a final word of wisdom, bear in mind that the very best tax preparers are going to book fast, and the closer you get to tax season, the less likely it becomes that you’ll get the “best of the best” for filing your return.

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Tax Scams on the Rise

In the world today, all kinds of scams exist. Some scams are enacted by phone; others happen over email, in person, or through standard mail. All, however, are designed with the goal of taking your hard-earned money away from you and putting it in the hands of unscrupulous scammers.

Tax scams are one of the most common types of scams, and, as such, it’s important for you to be aware of some of the more prevalent ones. That way, if someone tries to pull one of these scams on you, you’ll be “in the know” and able to protect yourself.

Scam #1: The Call from the Aggressive ” IRS Agent”
If you ever get a phone call from someone claiming to be from the IRS, put your defenses up. There’s a good chance that the person on the other end of the phone isn’t an IRS agent at all but is instead a cold-hearted scammer.

With this scam, false “agents” will typically tell you that you owe money of some kind and threaten you with arrest, deportation, and other serious consequences if you don’t pay up immediately.
Whatever you do, don’t give these scammers any personal information and definitely don’t pay them any money! Real IRS agents would not behave in this manner and would contact you by official mail from the IRS first. If this happens to you, call the police as soon as possible to report it!

Scam #2: The Stolen Refund
Another horrible scam occurs when a thief files a tax return in your name and then takes your refund money! While you might think this crime would be hard to commit, most scammers can gain access to your refund with nothing more than your social security number.

As such, you’ll want to be extremely careful to keep your social security number private and secure. You’re also less likely to be victimized by this crime if you file your taxes early on in the tax season. That way, if scammers do target you, you’ll have already received your refund and they’ll be in a big trouble!

Scam #3: Fake Tax Preparers
This scam is scary, but it does happen. There are some people out there who claim to be professional accountants or tax preparers and who often seem totally legitimate- even charging fees for their services. However, these “professionals” can be scammers who are plotting to steal your money.
While anyone can be targeted by fake tax preparers, they often tend to go over the most vulnerable victims, such as those who don’t speak English well or who are elderly.

To avoid becoming a victim of this type of scam, only work with true, professional accountants! You should look through the IRS’ Federal Tax Return Preparer Directory to find legitimate, trustworthy tax preparers in your area.

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2013 May Be the Year You'll Need to Hire a Professional

By Dan Caplinger

It's hard enough doing your tax return in normal years, when tax laws look a lot like they did the year before. But with the massive changes that the just-in-time fiscal cliff compromise legislation created in the tax code, this might finally be the time to get a professional tax preparer on your side.

Taxes (Photo credit: Tax Credits)

Choosing the right preparer could greatly increase your refund by finding tax deductions, tax credits, and other benefits you might miss -- but picking one isn't always easy.
Below, we offer some tips on how to pick your pro. But first, let's look at all the reasons why having an expert on your side makes sense this year more than ever.

Changes at the Edge of the Cliff
Until politicians in Washington managed to come to their last-minute agreement, tens of millions of taxpayers were facing potentially huge tax increases.

In particular, the alternative minimum tax promised to wreak serious havoc on millions of families' returns. The AMT was originally intended to prevent the very rich from using loopholes and credits to avoid the tax man altogether. But time and inflation expanded the number of people who fell under the AMT enormously -- or would have, had lawmakers not annually passed a temporary "patch" to the AMT that adjusted it for inflation.
Thanks to the partisan wrangling in Washington, though, the last temporary patch had expired at the end of 2011, and -- had no fiscal-cliff deal been reached -- initial estimates put the number of new AMT payers this April at upwards of 30 million, with an average tax hit of around $4,000 and some taxpayers seeing even larger increases of up to $8,000.

The fiscal cliff compromise actually solved the AMT issue permanently, and extended low tax rates for the vast majority of taxpayers. But in the process, it brought back some confusing provisions to the tax code. For instance, the measure extended a tax break for charitable contributions made from IRAs. But since the new law didn't take effect until after the ordinary deadline for 2012 contributions, the IRS had to issue special rules to allow taxpayers to make charitable distributions in January, but have them treated as applying to the 2012 tax year.

Looking ahead, things will get even more complicated for many taxpayers. Although the highest ordinary income tax rates only take effect above $400,000 of taxable income for single filers and $450,000 for joint filers, several new provisions apply at lower income levels. Those include the new Medicare surtax of 3.8 percent on investment income, which applies to income above $200,000 for singles and $250,000 for joint filers. Also, phase-outs of itemized deductions and personal exemptions are also back, meaning that, after enjoying several years of temporarily favorable rules, millions of taxpayers will see those tax breaks fade away.

Getting an expert tax preparer to help you now will not only make it easier to get your 2012 tax returns filed but also help you get a head start on planning for 2013's taxes. But you have to find the right tax professional for you.

Who to Hire and When Not to Bother
Most of the advice you'll find on getting a professional tax return preparer in your corner focuses on qualifications. As when hiring any professional, it's important to check on background, experience and quality of service, to get recommendations from friends, and to weigh your particular needs against each candidate's strengths and weaknesses.

But it's equally important to find a tax preparer with whom you're comfortable on a personal level. Like a doctor or lawyer, your tax preparer will learn sensitive personal information about you, and you'll need to feel able and willing to tell him everything necessary for him to file a complete and accurate return.

Moreover, make choices based on the level of difficulty of your taxes. If your only income comes from your job and you typically file a 1040-EZ, you don't have to waste money on a high-powered tax attorney or accountant. But if you're dealing with special tax rules this year, going to the mall to work with a novice preparer at a national chain can cause unnecessary anxiety.

Most importantly, don't wait too long. By the time April rolls around, the best tax return preparers will already be swamped, and you may well find yourself out of luck trying to find one to help you.
So if you're among the roughly 60 percent of taxpayers who'll get expert help on their returns this year, procrastination is the enemy. Go out and find someone to fight for your biggest possible refund now.

Related articles

• Expiring credits, deductions extended by Congress (news.yahoo.com)
• Taxpayer Advocate Says Tax Code is "Unconscionable Burden," Suggests Junking the AMT (reason.com)