Half of taxpayers use a tax preparer — here's how to find the right one for your situation


If you're not confident about your tax preparation skills or you just want help filing your return, you're not alone: About half, 51%, of all taxpayers, and 61% of taxpayers over the age of 65, use a professional tax preparer when filing their returns, according to the most recent IRS data.

Hiring a professional to prepare a basic tax return — a federal 1040 form and a state return, claiming the standard deduction — costs an average $188, according to 2018 data from the National Society of Accountants. If you itemize your deductions, that average creeps up to $294.

If you do decide to hire a tax preparer, you want to make sure you're getting good advice and you're not overpaying. Here are some tips.

First, see if you qualify for free help

Before you pay to have someone prepare your taxes, check to see if you qualify for free tax assistance. The IRS certifies volunteers through two programs that operate out of libraries, schools, and other community venues.

  • Volunteer Income Tax Assistance (VITA) offers free tax help to those who generally make $56,000 or less, taxpayers with disabilities, or those whose English language skills are limited.
  • Tax Counseling for the Elderly (TCE) provides free tax assistance to people who are age 60 and older.

You can find locations for both programs using the locator tool on the IRS website.

There may be other organizations offering free tax help in your area, too. AARP's Tax-Aide program, for example, offers free tax preparation help to anyone, but caters specifically to those 50 and older.

Try not to procrastinate, April Walker, the American Institute of CPAs' lead manager for tax practice & ethics, told Grow recently. "If you wait until the last minute, you may not be able to get an appointment," she says. "It can also cause you to scramble for the information. Early prep is the best course of action."

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Find an expert who understands the complexities of your return

When interviewing a potential tax preparer, "make certain that they are familiar dealing with your type of situation," says Carolyn McClanahan, a certified financial planner and the director of financial planning for Life Planning Partners in Jacksonville, Florida. Different preparers can have different qualifications and specialties: Some are only able to prepare a basic return, while others may focus on working with, say, entrepreneurs or wealthy people.

If you're a full-time freelancer or have side-hustle income, you want a preparer who can help you avoid tax pitfalls common to 1099 workers and navigate potentially tricky tax breaks. Likewise, if you have a trust, or any kind of unconventional assets or capital gains, make sure your preparer understands those parts of the tax code, she says.

Returns that involve multiple states — like if you've earned income in more than one state, or if you live in one state and work in another — can also benefit from a preparer who is familiar with that scenario.

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Ask for recommendations — then do some vetting

"Get referrals from friends or business associates," says Mark Prendergast, a certified public accountant and the director of tax strategies at Inspired Financial in Huntington Beach, California. "Find out if the people are happy with them, and really evaluate the response."

It's important to make sure that you're being referred to a trustworthy and experienced preparer and not just someone who a colleague has settled with out of inertia. After all, several scams the IRS warns about in its annual Dirty Dozen list involve shady tax preparers who inflate refunds or falsify income, among other dishonest practices.

To protect yourself, check a preparer's background and credentials before you hand over any money or sensitive tax documents. And scrutinize their fees: Experts say it's a red flag if a preparer charges based on the size of your refund.

"Some tax preparers cheat and they lie," says Prendergast. "They've played the audit lottery, and they may get [clients] bigger refunds than they deserve."

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The question of whether you should hire a tax preparer, use a program like TurboTax, or simply fill out the forms by hand depends on the complexity of your financial situation and how comfortable you are with managing it.

"If you feel you are not financially savvy at all, you should always get help," says McClanahan. "If you know the basics and you don't have any weird sources of income, then it's way more cost effective to do it yourself."

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