Ask Questions Before Letting Someone Do Your Taxes
Yes, it’s getting close to that time again. Christmas has passed, New Years is in the rear view mirror, and pretty soon, you will be getting a bigger-than usual envelope from your employer. No, I’m sorry to say that I’m not referring to a cash bonus, although that would be wonderful. I’m talking about your annual W-2 forms, which means that tax season is upon us. For many, it is a time of dread due to their lack of organization when it comes to saving receipts and related documents, for others it is a time of joy since they will be getting their planned refund to finance the family vacation. Some people have a tax preparer that they trust and have been with for years. Most likely, I am not speaking to them with this message. No, this message is for those who is searching for the right person to handle the task of preparing their taxes.
During this time, 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” who’s 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. (Below I have also posted some interesting links from craigslist.com which I found to be very scary)
- 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. This ad is for Liberty Tax Service which extends possible employment after taking a short, free course|
This ad is for an unnamed entity which prefers experience, but will hire and train
Here is another Liberty Tax Service ad, which offers employment after a one week course
This one is good. They have no mention of qualifications needed yet want applicants to tell them why they are the best choice to join this “award winning” team.
This last one doesn’t even care about experience as they will train you, but made sure to mention no vulgarities
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 the 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 like the ads belowThis ad lists payment as only commission, but at least they want experience
This ad pays prepares a lowly salary while offering unknown incentives, but again, at least they look for experience
Here’s one that offers a 15% commission on the amount invoicedThis 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. That might bode well for the individual preparer and for the company, but for the taxpayer, it is dangerous.
- 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 by additional 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.
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