Come tax season, you may want to knock on the door of a professional, but who you choose to help you in your tax preparation duties can be a more complicated decision. There are two types of tax professionals: tax preparers, who usually work seasonally to file income tax, and tax accountants. Knowing the differences between these two professionals can help you determine who to hire.
Education and Training
Accountants might have a professional and have usually completed a four-year university degree, but tax preparers may not have any formal education, just a tax preparation course. Large companies have their own accredited tax school that all employees must go through. When choosing a tax professional, be sure to ask about the type of training or education they have received and whether that training is accredited.
It is a common assumption that tax preparers can only do simple returns that involve a couple of receipts, but that is a misnomer. The majority of tax preparation firms offer a wider scope of options. If you have complex investments, rental properties or are self-employed, be sure to ask about a tax professionals experience and knowledge related to your particular tax situation to ensure they can handle your return.
There is a big cost difference between hiring a tax preparer and a tax accountant. While a tax preparers fees are usually based on the complexity of the return, a tax accountant can charge hundreds of dollars an hour. Always ask for the cost upfront and whether the fee will be based on the number of slips, hours or a flat fee. Beware of tax professionals who base their fee on the percentage of your refund.
Before hiring a tax professional, ask whether they will fix a return in the event of an error. For example, when they make an error and you are assessed more tax and a penalty and interest on that, the tax service will pay the penalty and interest. Ask the firm for any service guarantees before you hire them.
When hiring a tax professional, personal comfort is key. Money is a very personal topic for many people. It is showing people how much money you make, it reflects your investment decisions, and it shows how much you save or do not save. You have to be very comfortable with the professional you are dealing with. Establishing a relationship with a tax professional can help make the process easier year after year.
When choosing a tax professional, it is important to ensure that the person handling your tax return is reputable. An independent tax preparer may offer great rates, but once your return is filed, they disappear. This can cause a lot of headaches if there are questions about your return after the fact.
Make sure that you research on the firm to ensure it has history and checking with the Better Business Bureau to make sure they are reputable. At the end of the day, it is the taxpayer who is ultimately responsible for the accuracy of their return.