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Share to Pinterest8 Things to Consider When Using a Tax Service

8 Things to Consider When Using a Tax Service

By Chris Jones
Share to Pinterest8 Things to Consider When Using a Tax Service

Many people avoid filing their tax returns themselves and choose to have a tax service do it for them. They may not trust their own experience to give them the right credits and deductions or find it too time-consuming or anxiety-causing. Whatever the reason, when using a tax service, it is important to ensure the process is simple, worry-free, and legal. Tax laws and requirements change each year, and it is the job of a professional to keep on top of these trends.


Does the Preparer Have a PTIN?

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Although many people assume a large tax service has covered all of its bases legally, it is a good idea to ask about the PTIN or Preparer Tax Identification Number. If you choose to go with a lesser-known service or an individual who provides this service as a secondary business, they still need this number. Without it, federal law prohibits them from completing tax returns. You can confirm the number through the online IRS PTIN directory.

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What Are the Preparer's Tax Preparation Credentials?

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There is a sea of credentials upholding people who prepare taxes. A CFP or certified financial planner has passed a certification exam to prepare taxes. When considering a CFP, the key is to ask if their experience includes actual tax returns or just tax planning. A CPA or certified public accountant is state-certified to honor a code of ethics in their practice. They focus on auditing, business valuation, financial planning, accounting or technology consulting. The IRS trains enrolled agents or EAs, noncredentialed Annual Filing Season Program participants or AFSPs, and Volunteer Income Tax Assistance agents.

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How Would the Service Handle an Audit?

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An audit is the last thing most of us want to consider when filing taxes, but it is always a possibility. When choosing a tax service, select someone who is experienced and confident in handling audits. Should your tax situation takes you to court, a CPA, attorney, or enrolled agent can represent you against the IRS. People in these fields have unlimited representation rights.

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How Do They Determine Fees?

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The fee for hiring a tax preparer varies widely. Do not be afraid to inquire into how he or she determined the fee. In many cases, the price depends on the complexity of your return. Some people need to file returns that require more than one additional schedule or supporting form. Expect a higher cost if your tax situation more complicated. In some cases, you might have a reduced rate for a federal return and add-on fees for state and local tax returns. Discuss the fee up front to avoid any surprises. Do not hire anyone who bases their fee on the amount of money you expect to receive as a refund. This gives them a reason to add on questionable deductions.

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Will They Sign Your Tax Form?

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The signature of the tax preparer is a requirement of PTIN from the IRS. If the person who files for you refuses to sign or asks you to sign the form as if you have prepared the tax form on your own, you both are breaking the law. This is a sure indication something is not right.

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Does the Tax Service Give You a Copy of Your Filed Forms?

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Even if the tax service you choose informs you they are filing your tax returns electronically, they should still be able to give you a copy of your taxes. You will need to keep a hard or electronic copy for your records. Many people keep them for proof of filing, proof of income, or in case of an audit. If the tax service does not agree to give you a copy, you should be concerned. That being said, you may not get a copy immediately to take with you out of the door because, in the rush of tax season, the filing lines are long. However, your copy should be mailed, emailed, or available for pick-up within a few days.

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Is This Their First Season Preparing Taxes?

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You may be the kind of person who likes to cheer for the underdog, but you cannot do this with your taxes. A tax service may have all the credentials needed to prepare your forms, but if it is their first year in business, be cautious trusting them with complicated returns.

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Are They Equally Well-versed in State Returns?

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Understanding enough about tax returns to get you the maximum federal return is impressive, but a firm understanding of state and local tax laws is even more useful. To avoid excessive fees, varying approaches, and red tape, find a tax service that does it all. A one-stop shop will save you a lot of extra energy -- and, possibly, money.

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