8 Essential Tips for Choosing the Best Tax Professional

There are a lot of reasons why you shouldn’t do your own taxes. Prime among them are inadvertently adding errors and not finding all the tax deductions you're eligible to take. Another is simply to alleviate the burden in terms of time and stress.

But choosing the right tax professional can create its own conundrum. Here are eight essential tips to help you avoid wasting money on the wrong tax professional.

Are you single with no dependents and just need a (relatively) simple personal return taken care of? Maybe you’re self-employed and run a company with a dozen employees. 

Perhaps it’s a family business and one of your part-time employees is also a dependent. Maybe you make money from a side hustle or you need to be represented during an audit.

If your goal is to get a basic return done, any tax prep chain will likely fit the bill. But the more complex your tax situation, the more specific expertise you’ll need.

While you certainly don’t want to find yourself in a stressful “My Cousin Vinny” situation — we mean the beginning of the movie, of course — asking people you trust for a recommendation is a good idea. 

Even better if that family member, friend, or colleague is an attorney or agent who knows what to look for in a tax preparer.

Technically, anyone can be a tax preparer. The only thing they need to get is an IRS Preparer Tax Identification Number. Of course, that means there are going to be some significant variations in terms of education, experience, and skill from preparer to preparer.

When looking for a licensed tax preparer, keep in mind that there are three options to choose from: certified public accountants (CPAs), enrolled agents, and tax attorneys.

CPAs need to have a degree; are licensed by state, D.C., or territory boards; and have to pass an exam. Enrolled agents are licensed by the IRS itself. Tax attorneys usually have a law degree, have passed the bar, and are licensed by a state, D.C., or territory court.

If you really want to be sure your tax preparer is on the up and up, you can check the IRS's online directory.

It’s good to know a tax pro’s history before you entrust your financial life to them. First, check with your local Better Business Bureau to see if there are complaints about their work or disciplinary actions taken against them.

More specifics are available for different kinds of licensed tax preparers. For CPAs, check with your state, D.C., or territory Board of Accountancy. For enrolled agents, check with the IRS online. For tax attorneys, check with the bar association.

When you hire someone to prepare your taxes, you’ll have to pay them, unless you qualify for free filing. That in and of itself is not a shock. But you want to be sure you know up front what you’ll be paying so you don’t get a surprise on the back end.

It may seem obvious, but make sure the tax preparer you pick is available to do the work you need them to do. The earlier you can schedule an appointment with your chosen pro, the better. Things get jam-packed come tax time.

Getting a refund isn’t really a good thing because it means you’ve spent the previous year giving the federal government an interest-free loan. 

But if you are due a refund, make sure your banking information is correct if you’re getting direct deposit and e-filing, which you absolutely should do.

And if you do get a refund, don’t just spend the money. Try these smart money moves instead.

Never, under any circumstances, sign a blank return. And do not hire a tax preparer who asks you to. The same goes for any tax preparer who won’t sign a return themselves.

The IRS warns taxpayers to steer clear of “preparers who base fees on a percentage of the refund or who boast bigger refunds than their competition.” It’s illegal for them to base their prices on your refund.

In short, if anything seems sketchy — like a temporary office or lack of a website — listen to your gut and get out.

Finding the right tax pro boils down to finding the person who’s the best fit for you and your needs. It doesn’t have to be someone you invite to your birthday party, but it does have to be someone you trust to handle your financial information. 

If your taxes are simple enough to do yourself, be sure to choose the best tax software to help you. And don't forget that the deadline to file your tax return is April 18, 2023.