3 Questions to Ask Your New Tax Preparer

When you need legal assistance, you (hopefully) don’t flip through the phone book to the attorney section and pick a name at random to hire.  When you need medical care, you don’t drive around and stop in at the first place you see that says doctor on the door.  So why would you choose just anyone to hire to prepare your tax return?  

Or for that matter, use a chain tax service where you don’t have a chance to even speak to your assigned tax preparer until you actually start the tax return process?  

Some people already have a tax preparer that they trust and have been with for years.  Most likely, I am not speaking to them with this message (unless you are looking to switch in which case you should pay attention too).  No, this message is for those who are still searching for the right person to handle the task of preparing their taxes.

The thing to remember is that you are hiring someone to do work for you.  You should treat it just like you were interviewing an employee, because, essentially it’s the same type of arrangement.

personal tax return
You shouldn’t have to lay out good money for bad service. Do your homework before hiring a tax preparer.


During this time of the year, you will hear commercials for the popular national chains on the radio and see them on tv, read about the local guys on craigslist.com or in your local paper, and even hear about a “friend of a friend” whose sister used this guy out of an “office” with the shades drawn who got them a huge refund that was more than they thought was possible.

Unfortunately, there are plenty of unscrupulous folks out there that will mislead/misguide you, pay no real attention to you, or simply do a horrible job. 

Now, there is no perfect way to find out about a person/company, since as of now, there is no licensing requirements to be a tax preparer, but there are steps that you can take to ensure that you are getting someone qualified, and the best way is to ask questions.


  • First and foremost, ask what kind of qualifications the actual preparer has (especially if you are going to a franchise).  Ask about the education of the preparer, the nature of their primary career (whether or not they have a background in accounting or tax law), how long they have been preparing returns, and the complexity of the returns they have experience with.  Some of the chains will hire people after a brief course which only touches on the basics of tax law and theory.  

    There is no way that anyone should be entrusted to touch another person’s taxes after only having a week’s worth of training.  Especially important is when using these franchises, who are notorious for using inexperienced preparers, but they also tend to hire people who are doing this as a supplementary income source and may not put as much care and effort into your return. 

  • Another crucial question to ask is how the preparer will be paid.  Accountants who prepare taxes within a firm are almost always strictly on a salary.  They get paid the same rate regardless of how many returns are prepared or how much the billings run.  On the flip side, I have noticed that many ads looking for tax preparers are offering only commissions or are a low salary/bonus situation.

    This method of payment practice doesn’t seem very ethical to me (just a personal view).  It suggests that the company is only interested in volume.  When volume is a primary concern, the speed with which the returns are prepared is paramount to the quality with which they are prepared.  Under those circumstances, not only can mistakes me made more easily, but also the amount of attention each tax return (as well as the customer) will receive is decreased.  That might bode well for the individual preparer and for the company, but for the taxpayer; it is plain dangerous for the taxpayer.

  • Don’t forget to ask about the company pricing policies, either.  It is just as important to understand and be comfortable with how much you are going to have to pay before you get invoiced (which is generally upon delivery of the completed product).  Every firm has a different way of charging for their services: by the hour, by the project as a whole, by the project broken down with a base price and additional fees for each schedule.  Whatever the method, anyone charging too little should be second-guessed just as much as someone charging what appears to be too much.  Don’t be afraid to call around and ask for quotes, even if they aren’t exact, as well as go in and meet people in person to see what kind of feeling you get. 


Overall, there is more than simply the cost that should go into your decision as to who and where you get your taxes prepared.  In my personal experience, you will pretty much get what you pay for.  If you pay a little, you will get shoddy service both on the return as well as follow-up treatment. If you pay what seems to be an exorbitant fee, you are most likely paying for more than just a tax return but not receiving any value in exchange. 

Some preparers are not very friendly, and are all about business, while others will talk your ear off and make you wonder if they ever get around to doing any actual work.  The choice ultimately comes down to who makes you feel the most comfortable, but no matter what direction you choose to go, having as much information as possible will help you make the best choice.

  • http://blog.familymoneyvalues.com Marie at FamilyMoneyValues

    We started having an accountant prep our tax returns when we bought a nightly rental vacation condo.  He is a CPA with years of experience and also a lawyer.  We found him through a recomendation from a family member who had worked with him at Price Waterhouse….he is more expensive that a tax prep service but we like the qualifications and privacy he provides.

    • http://www.dollarversity.com Eric J. Nisall – DollarVersity

      That’s one of the best ways to find any service person.  You trust the judgement of the people around you so if any of them make a recommendation, it’s generally going to be a good idea top give them a shot.  Unless of course the advice is coming from a loony toon, then you do just the opposite and never call the person they recommend!

  • http://www.moneyspruce.com/ Jeffrey Trull

    I’ve never had someone prepare my taxes, but I’m considering it this year, at least as an educational experiment to see how it compares to what I’ve done in the past. Is a CPA always preferable? Or are there times when I should consider just a plain tax preparer? (I believe there are some sort of certifications for these people too, right?)

    • http://www.dollarversity.com Eric J. Nisall – DollarVersity

      There are no specific designations or certifications just yet for tax preparers.  Starting in (I believe) January 1, 2014 all people who sign as a paid preparer will be required to pass a certification exam and maintain educational credit going forward.

      To be completely honest, going to a CPA isn’t always the best option, as many CPA’s in medium-to-large firms don’t do all of the returns themselves.  They leave it up to the staff to do and it will be reviewed by the CPA for accuracy (in many instances).  There are a lot of accountants who are not CPA’s and who are actually more proficient in tax preparation too.  This is simply because not all CPAs specialize in tax work, some are audit experts or forensic experts.  

      At a minimum, I would say a college degree, and at least 5 years experience would be ideal for moderate tax returns (K-1, Schedule E).  The reason for the college degree is that is where the fundamentals of accounting and tax theory are learned.  People that learn how to do taxes from a correspondence course, H&R Block-type course or on their own may know where to put certain numbers on a return, but most won’t understand the why’s in order to best serve their clients.

      • http://www.moneyspruce.com/ Jeffrey Trull

        Thanks, Eric! Very helpful advice!

  • http://www.moneylifeandmore.com/ Lance@MoneyLife&More

    I really hope people who take their returns to a local CPA firm realize that it isn’t likely the partner that you met with preparing your return. Sometimes they don’t even review it in great detail, they just have a person one level above the prepare review it and then they sign it after a quick runthrough.

    • http://www.dollarversity.com Eric J. Nisall – DollarVersity

      That’s really only true in larger firms. In the small-medium range the partners will most likely be reviewing the returns since it is their names going on them. At the very least, it will be a senior manager, one step below partner level. The firms I have worked at were small/medium and the partners were always involved, and sometimes spent more time then the tax manager on the review process.

  • http://twitter.com/Eyesonthedollar Kim

    I have a great CPA and someone on staff who does most of the prep work before the gets the final numbers, so I’m pretty lucky there. There is one tax service in town who hires this guy to dress up in a Gumby outfit and stand on the corner waving a sign. Maybe Gumby is the tax guy, who knows? Seems like a real professional outfit!

    • http://www.dollarversity.com Eric J. Nisall – DollarVersity

      Don’t get me started on those sign dancers Kim! I’ve seen one of the chains dress someone up as the Statue of Liberty to prance around on the sidewalk and it just looks petty. Personally, I think if you need to resort to something like that to bring in clients as a professional service firm there is some other issue that probably needs to be addressed (and rather quickly I’d guess).

  • http://twitter.com/moneybeagle Money Beagle

    My dad grew up and became best friends with a man that is a CPA, and he’s always done our family’s taxes and I’ve never once had to question his qualifications or anything else. At some point he’ll retire and for the first time I’ll have to make sure to actually think about the person I’m trusting our taxes with, but until then, I’m very thankful for my dad’s connections!

    • http://www.dollarversity.com Eric J. Nisall – DollarVersity

      I had a similar situation as a kid. A family friend was a CPA and he’d have us over the house to do the taxes while me and his son played ball out back. It’s great to not have to go through the process until you are more experienced in life and know what to look for and how to approach it. I’m sure when the time comes, it will be more tedious than anything for you.

  • FrugalPortland

    Do you think everyone needs to hire someone? What if your expenses and income are fairly straightforward, can you get away with doing your taxes with software?

    • http://www.dollarversity.com Eric J. Nisall – DollarVersity

      Not at all. When I did the TurboTax review earlier this month, I attested to the fact that is very good for simple returns but the definition of “simple” depends on the individual. It doesn’t hurt to try it out and if you get to a point where you aren’t very confident, you can just stop and call a professional preparer.

      Even though it’s what I do for a living, I would never suggest that someone spend money unnecessarily. If it’s something like a W-2 some interest/dividends, and simple itemized deductions, I would say that it’s probably more beneficial to use the software. If there is a Schedule C and you have no real idea as to what can or cannot be legally included, then I would suggest hiring someone. Again, it all depends on how comfortable you feel going at it on your own.

      • FrugalPortland

        Thanks! I have the Schedule C and am wondering if I should get help. I’ll slog through it for now, and I can always ask someone to look it over, right?

  • Brick By Brick Investing

    When I was younger my taxes were so simple that I could use Turbo tax, then I upgraded to one of the big chains (H&R Block) only to find they were almost as vauge and general as turbo tax. So I decided to hire a professional, they did great work but literally charged me and arm and a leg for their services. All the money I got back from the IRS went to paying the firm.

    • http://www.dollarversity.com Eric J. Nisall – DollarVersity

      Well, in all honesty, you’re paying for the service not the refund. You’d be paying the same price (assuming you used an ethical preparer) had you owed money to the government too. Granted, I don’t know the first thing about your situation or who did your taxes, but there are some people who I think charge outrageous fees for the amount of work that goes into a tax return. I scale my fees back and add value so my clients will keep coming back and refer me to others. I’m sure I could be better off charging what some others charge, but I don’t think it’s necessary unless the situation warrants it (ie: giving me a shoebox to have to sort through, or making me pull teeth to complete a return).