Choose your tax preparer carefully

COLUMBUS — According to the IRS, 60 percent of Americans use a professional tax preparer or one of the tax software products  to file their income tax returns. But tax laws are complicated and if you decide to hire a professional, it’s important to choose carefully.

“Because of economic crisis, many Ohioans are facing new tax situations for the first time,” said Ted Johnson, CPA, Parms & Co., Columbus, and a member of The Ohio Society of CPAs (OSCPA). “Hiring a qualified tax preparer may be a smart move, but it’s important to hire the most qualified professional for your situation.”

Unqualified tax preparers may not be fully educated about all of the recent tax law changes passed to help struggling taxpayers that could save you money, or might make mistakes that could increase your risk of being audited.

As of January 1, the IRS requires preparers of individual tax returns to register with the government and pass a test to prove their competence. Certified Public Accountants (CPAs) are exempt from this rule because they have passed a uniform national exam, and have met state education and experience requirements for certification.  They are licensed and regulated by the Accountancy Board of Ohio and take 120 hours of continuing education every three years to maintain certification and stay current on important tax and regulatory changes.

Questions to Ask before you hire a preparer

OSCPA recommends screening potential tax preparers carefully before you hire one. Use this list of questions as a guide:

What training have you received in preparing tax returns?

Ask preparers what tax law training they have recently taken and if they are affiliated with a professional organization such as The Ohio Society of CPAs or American Institute of CPAs. These organizations offer members continuing education and hold them accountable to a strict code of ethics.

Are you in business year-around?

Many tax services operate only for a few months each year. Your tax professional should be available after April 15 for questions about your return and to develop tax-saving strategies that will save you money next year.

What is your process?

Reputable preparers will explain their process and ask questions to determine your true income and expenses and qualifying deductions and credits. This will help you avoid penalties, interest or additional taxes.

What is your philosophy about deductions and credits?

Some preparers are very aggressive in their approach while others may overlook legitimate deductions or credits. Qualified preparers should arrive at similar numbers for the same return.

How will you be paid?

Some preparers charge a flat fee for completing returns while others may charge by the form or hourly if your situation is more complex. Beware of a preparer who bases fees on a percentage of the refund amount, known as a contingent fee.

Will you sign my return?

You are legally responsible for the accuracy of your tax return even if it’s prepared and signed by someone else. However, a paid preparer is required by law to sign the return. So check it carefully, sign it after your preparer, and make sure you get a copy for your records.

Can you represent me if I am audited by the IRS?

Only CPAs, attorneys and IRS enrolled agents can represent taxpayers before the IRS in all tax-related matters. Ask preparers if they would pay penalties for errors they or their associates make on your return.

Do your homework

You can investigate whether a preparer has any questionable history by contacting the Accountancy Board of Ohio at 614.466.4135. Also ask the preparer for a list of current clients whose situations are similar to yours. Inquire about the preparer’s accuracy, professionalism and if they complete work on time.

As a bonus this year, you’ll have until Monday, April 18, to file your tax return since April 15 is a federal holiday and the IRS offices will be closed. But don’t wait until the last minute, especially if you plan to hire help.

For tips on how to get ready to meet with your preparer or to find a CPA in your area, visit FinancialFitnessOhio.com or call OSCPA at 888.959.1212.

The Ohio Society of CPAs, established in 1908, represents more than 22,000 CPAs in business, education, government and public accounting.  The Ohio Society’s members not only meet statutory and regulatory requirements as CPAs, but also embrace the highest standards of professional and ethical performance.  This is achieved through ongoing professional education, comprehensive quality review and compliance with a strict Code of Professional Conduct.