Money Management

How to Find the Best Tax Preparer for Your Situation

By  Kelley Long

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As a CPA (Certified Public Accountant) who used to actually prepare taxes for other people, many are often surprised to learn that I don’t even prepare my own income tax returns anymore. So I can attest to the challenge of finding the best tax preparer for your personal situation – not all tax preparers are created equal, but also not everyone needs a CPA.

What’s Best for You? It Depends!

Finding the right person (or software) to help with your taxes depends not only on the complexity of your tax situation, but also on what kind of service you’re looking for. Believe it or not, pretty much anyone can charge to do taxes for other people as long as they’ve paid the right fees and registered with the IRS.

If you’re just looking to make sure your taxes are filed correctly in accordance with the documents you supply, you can probably find someone pretty cheap. But if you also expect that person to help ensure you’re paying the least amount of taxes required, you should expect to pay a little more and you’ll want to do a little more due diligence into their experience.

I’ve tried everything from a full-service CPA firm to a tax app to do our taxes, and they all have pros and cons. Because my husband is an independent contractor (so he’s considered self-employed) and we make several trips to Goodwill each year to drop stuff off which requires an entry for each and every trip, our taxes are more of a data-entry issue than anything else. However, if time is money, then the money we pay someone else to prepare and file our taxes is money well spent.

If you’re in the same boat or find yourself with a new tax complexity that isn’t easily handled by the popular tax software and apps available online, here are some best practices for finding the best person to help you:

Decide if You Want a Tax Preparer, an EA or a CPA

What’s the difference? It mostly depends on what each credential requires as far as experience and demonstration of knowledge.

Tax Preparers

As I mentioned, pretty much anyone can all themselves a tax preparer as long as they have a PTIN, and that’s typically what you’ll get at the national chains like H&R Block or Jackson Hewitt, unless that person’s desk sign states otherwise.

Enrolled Agents

An EA (enrolled agent) is someone who has passed the IRS test for tax preparation and is allowed to represent taxpayers in front of the IRS. Most EAs are going to be pretty well-versed in the more common tax issues like what you can deduct, self-employment income and what credits you might qualify for. If you’re having a tax issue like a letter from the IRS about an old tax return, an EA can often help you figure it out even if they didn’t prepare the return in question.

Certified Public Accountants

A CPA (Certified Public Accountant) is someone who has a degree, studied accounting, and passed the Uniform CPA exam, which is no joke. Just because someone is a CPA doesn’t mean they do taxes, but if a tax person is a CPA, you can bet that they have a decent depth of knowledge. If they are a Personal Financial Specialist (CPA/PFS) (like me!) then they have also passed an additional test demonstrating deep knowledge of personal finance issues like retirement planning, budgeting and investing.

People usually turn to CPAs for tax help because they either have a complex situation or they are seeking in-depth tax planning assistance. If you’re just having a CPA prepare your taxes, chances are that an intern or early-career staff member is actually DOING the tax preparation, with the CPA doing the billing simply reviewing that work.

Hiring a CPA is totally worth it if you need someone who will connect all your financial dots (for example, you’re a small business owner who also needs help with bookkeeping, payroll, etc.), but if you’re really just looking for someone to input all your info correctly and make sure you’re not going to get in trouble with the IRS, you’ll probably find that it’s too expensive for what you need.

How to Choose the Right Tax Preparer for You

If your situation is pretty simple, but you just don’t want to spend the time on preparation, then you may be satisfied with a tax preparer through one of the large chains like H&R Block or Jackson Hewitt or even some of the newer tax prep apps out there. Just know that since these companies guarantee accuracy and determining your lowest taxable income, they’re likely to go a little overboard in requiring you to document things that ultimately may not matter, like charitable miles and medical expenses (which must exceed 7.5% of your adjusted gross income to count).

If you have a little more complexity like self-employment income, income in multiple states or rental properties, then you may want to look at either an EA or a CPA. The biggest difference here is probably going to be cost, although not always.

How to Find an EA or CPA to Help with Your Taxes

EA: National Association of Enrolled Agents

CPA: Look to your state’s society of CPAs by searching “Illinois (or whatever state you live in) CPA society.” That’s the best way to find a database of those in your area since CPAs are registered through their state rather than nationally.

CPA/PFS: AICPA database

When performing your search, make sure you limit results to specialties that apply to you. If the database has a category for “individuals,” always check that and then also look for other complexities you may have such as multi-state or small business. Your search is likely to turn up multiple results, so you’ll want to filter out anyone who works for a large firm because they’re less likely to actually work with “everyday” people and instead specialize in very wealthy individuals.

I tend to look for people who work in a small office or even on their own. They’re more likely to want to work with everyday people at an affordable rate. After that, it may come down to convenience. Whose office is easiest for you to get to in order to drop information off, sign documents or stop by mid-year for a tax planning session?

The sad fact is that there aren’t a lot of CPAs out there that actually want to do income taxes for regular families who just have jobs, kids, a house and a few charitable donations.

The easiest way to find one that does is to just pick up the phone and start asking, “Do you accept individual tax clients and what is your minimum fee?” If the minimum is more than $500, I’d say move on.


About the Author

Kelley Long

I believe that the true meaning of financial security is the ability to make decisions without having to worry about money. There are both factual and psychological aspects of this belief and my mission is to help people find that intersection in their own lives according to their personal values and goals.

I hold the CPA/PFS license and am a CFP® professional, but I don’t sell any products or manage any money. When I’m not writing, I’m working one-on-one with people through my coaching business, Financial Bliss with Kelley Long. I’m also a member of the AICPA Consumer Advocate Council and am frequently quoted in the press on financial literacy issues facing Americans.

I love to apply my own money lessons to my writing as well as break down some of the more complicated financial planning techniques into plain English. My goal in life is for all people to feel able to make their own financial decisions with confidence, being fully aware of the pros and cons of the actions they take.

Disclaimer: In order to make Wealthtender free for our readers, we earn money from advertisers including financial professionals who pay to be featured on our platform. This creates a natural conflict of interest when we favor promotion of our clients over other professionals not featured on Wealthtender. Learn how we operate with integrity to earn your trust.


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