So you decided to hire a tax preparer this year.
How do you choose? A quick Google search? A friend’s recommendation? The proximity
between the tax preparer’s office to your home?
How you decide to find a tax preparer is up to you, but remember it is only the first step.
Choosing the right tax preparer is the second step.
Below are the five most important questions you should always ask a tax preparer
before handing over your private tax information.
What is your legal designation?
California law defines only four types of professional tax preparers who can prepare your
tax return for a fee: An attorney, certified public accountant (CPA), enrolled agent (EA)
or a tax preparer registered with the California Tax Education Council (CTEC). If the tax
preparer cannot be verified as one of those four tax preparers, walk away and report the
individual to CTEC at ctec.org.
Do you have a Preparer Tax Identification Number?
As of 2011, all professional tax preparers who prepare federal tax returns must have
their own Preparer Tax Identification Number (PTIN) from the IRS.
Will you sign my tax return?
Paid tax preparers are required by law to sign your tax return and include their PTIN on
it. If the tax preparer says it is not required or refuses to sign it, walk away and report the
individual to the IRS.
How will you determine the fee to do my taxes?
It is always good to ask if the tax preparer has a list of costs for different services. Avoid
tax preparers who base the fee on a percentage of your refund or claim they can obtain
larger refunds than their competitors.
Are you bonded or insured?
CTEC-registered tax preparers (CRTPs) are the only tax preparers required by law to
obtain a $5,000 surety bond to protect clients against fraud. CRTPs who refuse to share
their bond information should be reported immediately to CTEC.
Some tax preparers may carry errors and omissions insurance to protect themselves
against a potential mistake or error made on a client’s tax return. Insurance is not a
requirement for tax preparers, but it is always good information to know.
Visit knowyourtaxpreparer.org to learn more.