Choosing a tax professional can be difficult. Deciding to hand your financial information and personal information out to anyone can be worrisome. But also trusting someone to help get your tax filings right can be difficult, especially since mistakes can result in penalties and additional costs, perhaps even a blemish to your “permanent record”. 

If you aren’t sure whether or not to engage a tax professional, please read here. If you’ve decided that you should choose a tax professional, then read on. I’ll provide some tips and some good to know information. 

Tips for Choosing a Tax Professional

  1. My top tip is to get a recommendation from someone in a similar tax situation as you have. Getting a referral from someone who is “W-2 only” when you have rental property has limited value for you. Getting a recommendation from someone who only has one state filing requirement when you have several states to file in has limited value. My warning here is that often tax pro clients might not understand or remember their own tax situation that well and clients may have trouble really knowing if they are getting good and accurate service and advice. Which leads to the next tip. 
  2. Ask the recommending person questions. Here are some good ones. Are they satisfied with the communications? The number one reason I hear from taxpayers switching to me from another tax pro was that the communications were unsatisfactory with the previous tax pro. Does their tax pro explain “things” to their satisfaction? What services does the tax pro offer? Does the tax pro provide any kind of guarantee? What are the processes for services like? Does the tax pro emphasize compliance, following the law or instead something more flexible (and wrong in my view)? I know most people will ask about price, but another question should be “is it worth the price? Do you get the value you expect for the price?”
  3. What if you don’t have anyone you trust who can recommend a tax pro? I would look for tax professionals who seem to obviously have the right expertise. Maybe they share information that is straightforward and not full of exaggerations. Maybe they write articles that share enough information that you can verify their expertise with other sources. They don’t jump to give an absolute answer before knowing all the needed facts to give a good answer. For example, you’ll notice in a lot of what I write I’ll say things like “if qualifying”, “sometimes”, “often” , and “most likely”. Because it can be difficult to write for all circumstances and to address all criteria in an article. Certainly in a social media discussion it can be difficult to make sure that all the pertinent facts are considered. Another way to address this problem is to ask a tax professional if the tax pro can connect you with one or two current clients so you can ask the clients questions. The tax pro would have to get permission from the current clients before sharing contact info.
  4. If a tax pro you’ve come to view as being “good” recommends another tax pro, then definitely consider that referral. Personally I only refer to other tax professionals I know and that I am comfortable will provide good service and who have the right expertise for the client. I was doing an intro interview with one prospective client and she said she had another tax pro to interview. I asked who and she indicated it was one of my peers and a friend. I said “she would really be a good fit for you”. I wasn’t trying to lose a prospective client, but I don’t have the best filter. That prospect did choose that friend as their tax pro. 
  5. You really should look at more than one tax professional. And ultimately choose the one that is the best fit. Interviewing at least 3 can be a good idea. 
  6. While not always necessary, having a tax professional who can relate to you can be helpful . For example, the Military Tax Experts Alliance is an association of tax professionals who have all lived the military lifestyle as either service members or military spouses. And since we are an association of tax professionals who operate independently, you can look at more than one military tax expert tax professional here. 
  7. Ask prospective tax professionals questions. Definitely ask similar questions as item number 2 above. But ask more. How much experience do you have with my tax situation? What kind of mistakes do you find with tax returns with clients in my tax situation? What do you do when you have made a mistake? (if the answer is that the tax pro never makes mistakes that is a huge red flag. Everyone makes mistakes). What does my tax prep fee include for services? What additional services do you offer? What happens if I don’t understand what you (the tax pro) is doing? How much can I talk to you during and after the tax prep process? What is your process for communication and collecting data? How do you keep my information secure? Do you have a Written Information Security Plan? (I wouldn’t expect a tax pro to share all the details of a WISP, but some generalities can be shared and if the tax pro says “huh?”, then that is a red flag as tax prep firms are required by law to have a WISP). When do you file extensions? How do you keep up with tax law changes? Do you ever turn away prospective clients and if you do, for what reasons?
  8. But what about credentials? I left this for last for a reason. Because everything before this will help you determine what is more important than credentials and that is: does the tax professional have the right knowledge, ability, and experience to provide the services you want and need? There are tax professionals who are not credentialed -who are not CPAs (Certified Public Accountants), EAs (Enrolled Agents), or tax attorneys- who do excellent work on very complicated tax returns. The advantage of searching for people with CPA or EA or JD next to their name is that you know they have had some formal training and they should have more knowledge than most uncredentialed preparers. In theory choosing a credentialed tax preparer makes it more likely that the tax pro will have the expertise you are looking for, but it is far from any guarantee. Unfortunately the people with those credentials do not always have adequate knowledge or they may provide poor service. Or most importantly, they may not have the expertise you need for your particular tax situation. I would not choose a tax professional just because of credentials. 

Let’s go over the different options for a potential tax professional. 

  1. PTIN Holders- Tax preparers with just a  federal preparer tax identification number and no professional  credentials and who don’t participate in the IRS Annual Filing Season Program (AFSP) are quite common. In some cases they may be required to have a state registration or credential but most states do not have either of those as a requirement to prepare tax returns. California and New York are the biggest two that do. PTIN holders (without any other credentials or AFSP participation) do not have representation rights -they can’t represent a taxpayer before the IRS- except for limited representation rights for returns they themself prepared prior to 2016.
  2. Annual Filing Season Program (AFSP) participants. Since a PTIN holder doesn’t have any continued education requirements to have a PTIN, The AFSP is a voluntary program which has education requirements. AFSP participants have limited representation rights for tax returns they prepared after 2015.
  3. Certified Public Accountants. CPAs are licensed by states boards of accountancy (or Washington DC or US territories). There are typically college education requirements and continued education requirements. CPAs have unlimited representation rights before the IRS. CPAs can represent taxpayers in audits, payment and collections matters, and appeals. CPAs in general do much more work than taxes. Typically various accounting and financial types of work. Some only work in the area of income taxes. Others don’t do any tax work.
  4. Tax attorneys. Attorneys are typically licensed by a state or their designees, like a state bar. They generally have extensive education requirements and ethical requirements. Tax attorneys of course specialize in tax advising and planning. Attorneys also have unlimited representation rights before the IRS. 
  5. The final credentialed tax professional with unlimited representation rights before the IRS is my favorite. Enrolled Agents (EAs) are licensed by the IRS. EAs have to pass an extensive 3 part exam and they have to complete 72 continued education hours every 3 years. EAs have to follow ethical standards.

**A few states have additional requirements or credentials for a tax professional.**

What is most important in determining which tax professional is best for you: who can provide the services you want and need? With the expertise that you need? And provide the value that you need and want? That might be an uncredentialed tax professional. That might be an AFSP participant. Or it might be a credentialed tax professional.

I hope this article is helpful to you. 

Some advice from the IRS  that might be useful: Choose a tax professional carefully and Choosing a tax professional.