Research has shown that about a third of businesses hire tax service providers to file their tax returns but hardly do they know much about the tax service providers they hire. About 80% of individuals who have worked with tax service providers never bother to ask about the credentials of their tax service providers. About 75% never ask whether their tax service providers would represent them during a tax audit. This is amazing because hiring a tax service provider implies sharing details regarding everything from your bank accounts to your earnings, to your marriage, to your kids, and even your Social Security number. If you are looking for a tax service provider, you have to be cautious with your selection. With so many individuals offering tax services, how do you ascertain that the one you choose is the most suitable for your business? You need to consider the tips explained here.
Do you have a Preparer Tax Identification Number? This is supposed to be your first question. Anybody who offers tax services for compensation is supposed to carry a PTIN prior to preparing returns. Without this number, a tax service provider isn’t allowed to prepare your return and you don’t want to find this at the end. Any good tax service provider should have their PTINs displayed on their sites so that any interested clients can peruse them. However, you can use the IRS online PTIN directory to find out about the tax service provider PTIN by yourself.
What is the tax service provider’s tax background? A slide of letters next to a name on a business card does not necessarily indicate more competence. It can indicate that the person in question has passed certain examinations or has particular tax training. Thus, you should ask what these letters imply as well as the way they’d relate to the task at hand. You shouldn’t be confused by the alphabet soup.
Have this tax service provider prepared a tax return in the past? As far as tax is concerned, there is no one-size-fits-all approach. This owes to the fact that tax returns aren’t the same. Some tax service providers are confident in Schedules C and /or E while some can execute forms 040-EZ as they sleep. Some specialize in tax-exempt organizations, fiduciary returns, or pass-through entities. Others still concentrate on small businesses or ex-pats and international taxpayers. There are as several differences as there are forms and schedules. You may find a tax service provider having a broad scope of knowledge hence being the best to meet any of your tax needs.
Does he/she know the requirements of the localities where you’re needed to file? Federal income taxes don’t know boundaries and they are the same across states. The case is different with localities. Your locality could have quirky filing requirements, particularly for business owners. It can get more complex if you have shifted from a locality to another or live in one and work in another. Ensure your tax service provider can handle your entire filing requirements.