As the year draws to a close, many consumers and business owners alike will begin thinking about prepping for next year’s tax returns. Although there are a host of self-serve services out there to help consumers file their own returns, we wanted to know when a consumer should take the jump and hire a tax professional. We turned to Andrew Poulos, principal of Poulos Accounting & Consulting, Inc., for his take.
Do I need a tax professional?
Poulos recommends that consumers hire a tax professional, if only to avoid potential headaches and audits later on. “I highly recommend consumers use a qualified tax professional for their tax needs. Often, consumers think they can purchase do-it-yourself tax software and then do their own taxes for relatively cheap. What most find out is that it’s not as easy as they think, or they prepare the tax return wrong and have to file an amended return, or they get audited and it ends up costing them more money in the long run.
Of course, the decision to hire a tax professional also largely depends on a consumer’s individual needs. Poulos strongly suggests “…that any consumer who has anything beyond a simple 1040 tax return with one or two W-2s hire a tax professional. Consumers who are homeowners with itemized deductions, have children, buy and sell stocks, own rental homes, have relocated due to a job situation, or are self-employed, should use a qualified tax professional.”
How should I choose my tax professional?
Although it’s easy to say a consumer should have a tax professional, it’s a different matter for him or her to find one. As Poulos says, consumers have to be very careful as to who they hire for their tax return preparation needs. Too much sensitive information is being exchanged between the two parties to base the decision simply on cost. Poulos recommends the following tips to make the hiring process as safe as possible.
Do your research.
“I tell prospective clients that they need to do research before deciding on who to hire for their tax return preparation. They can do research on the Internet by searching for a local tax professional on Google, which will allow them to read about the professional’s background on his/her website if they have one. They can search on a lead website such as www.thumbtack.com, which also allows consumers to request a quote from various tax professionals. Once they get quotes they can do research on each tax professional or call and speak to them on the phone.”
Ask your friends and family.
“Sometimes the best way is to ask a friend, family member or colleague and get a referral. If a friend has a tax professional they have been using for a long time, that would indicate that the professional is not only qualified but also provides good service, two very important qualities to look for.”
“[Consumers] should ask about the tax professional’s background. For example, ‘Is the tax professional licensed (Enrolled Agent, CPA or tax attorney)?’ ‘How long have they been preparing tax returns?’ ‘Do they specialize in certain industries if the consumer is a business owner seeking someone with knowledge in their particular industry?’
“They should also ask if the tax professional is licensed because only EAs, CPAs and tax attorneys can represent clients before the IRS and state agencies for audits and collections. Thus, if a consumer needs audit representation, the tax preparer won’t be able to assist them if they didn’t prepare the tax return, and the preparer may not have audit representation expertise.”
Search for a qualified tax professional.
“Not everyone in the tax business is qualified to handle complex tax returns, or returns beyond the basic 1040 tax return. A qualified tax professional will know deductions that the average consumer may not know, and with all the new tax laws being implemented such as the foreign bank account reporting requirements, it is very important that consumers use a tax professional that can prepare their tax return, but also educate them on new tax laws that may affect them.”
Make sure the tax professional is tech savvy.
“Another important thing in hiring a tax professional is to find one who is up-to-date with technology and has the capability to work remotely with their clients. I provide a secure portal for my clients to upload their tax information. This saves me time from having to meet with clients and it saves my clients from having to drive to my office. It allows me to work with clients all across the globe, and I am more efficient by being automated, which ultimately allows me to be more affordable to my clients. It’s a win-win for both the client and the tax professional.”