Tax preparers do a big chunk of America's tax returns — more than 80 million a year, according to the IRS — but if you're nervous about handing confidential information to someone in a largely unregulated field, you're not alone.
Here are some tips to help you find a good tax preparer and reduce the risk of expensive errors and exposing your finances.
If you do need a preparer, be choosy. "I wouldn't just simply go through the phone book and pick someone randomly," says Melissa Labant, director of tax policy and advocacy at the American Institute of CPAs. Asking friends, family or colleagues for recommendations can quickly reveal a preparer who's caused headaches, she said.
Tax attorneys and enrolled agents specialize in or have passed exams on tax rules, and many certified public accountants also specialize in tax preparation. At a minimum, Labant says, a legitimate preparer should have a Preparer Tax Identification Number, or PTIN, from the IRS.
Never assume that because someone works at a big tax-prep company he or she must be an enrolled agent or a certified public accountant, Evenstad warns. And don't assume a PTIN is valid, either — a 2014 Government Accountability Office study caught some unscrupulous preparers using fake PTINs or ones that didn't belong to them. You can verify PTINs and professional credentials on the IRS website , and you can check accounting and law licenses on state-level CPA and bar association websites. The National Association of Enrolled Agents also maintains a directory.
Know what to look for. The IRS requires paid tax preparers to put their name and PTIN on returns they prepare. Not doing so, or asking you to sign a blank return first, suggests a preparer is up to no good, Evenstad said. Directing your refund to a bank account that's not yours is another red flag. And make sure your return doesn't say "self-prepared."
Good preparers will also ask for last year's return, Labant says. "If they don't, then you'll know right away this person is not exercising due diligence and they could easily be missing several key items that need to be reported on your tax return."
The preparer should provide a secure portal for sending information, too.
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