Tax preparation: what to know

What the job involves, what changes the price, and what to ask a pro.

What tax preparation is

A preparer gathers your income and deduction documents, completes your returns, checks for credits and errors, and files them with the tax authority. People hire one when their return has several income sources, self employment, a home sale or other changes. This is general information, not tax advice.

Signs you need it

  • You received several tax forms and are unsure how they fit together
  • You are self employed and need to report business income and expenses
  • You sold a home, started a business or had a major life change this year
  • You received a notice and are unsure how to respond
  • You missed a year or several years of filing
  • You want to be sure you claimed the credits and deductions you qualify for

What the pro does

  • Collect your income forms, receipts, last year's return and identification
  • Ask about changes in your family, home, job or business
  • Enter your information and check it against your documents
  • Review the return with you before filing, explaining key figures
  • File electronically or on paper and give you a copy
  • Explain how to respond if you receive a notice later

What changes the price

Every job is different, so we do not publish prices. These are the things that move the quote up or down.

  • Number and type of income sources
  • Whether you are self employed or own rental property
  • Whether you itemize deductions
  • Number of states or locations involved
  • Whether prior years need to be filed
  • The condition of your records
  • Whether the preparer represents you if you receive a notice

What a written quote should spell out

  • Which returns and forms are included
  • Whether electronic filing is included
  • Whether support is included if you receive a notice
  • What documents you must provide and when
  • How and when you will receive copies

Questions to ask before you hire

  • What credentials or registration do you hold with the tax authority?
  • Will you sign the return as the preparer?
  • Can you represent me if I receive a notice?
  • What documents do you need from me?
  • How do you protect my identification numbers and files?
  • How do you handle a return where I owe an amount I cannot pay?
  • Do you file prior year returns?

Red flags

  • A preparer who will not sign the return
  • A fee based on the size of your refund
  • Promises of a larger refund before seeing your documents
  • Asking you to sign a blank return
  • Refund deposited into an account that is not yours

What you can do yourself

You can gather your forms, last year's return and receipts, and use trusted software for a simple return. A preparer helps when you have self employment, rental property, a home sale, or notices. Tax questions that turn on your specific facts are best answered by a CPA, enrolled agent or other qualified preparer.

Licenses and permits

Paid preparers generally must register with the tax authority, and CPAs, enrolled agents and attorneys have additional credentials. Some states regulate preparers too. Ask for credentials and check them with the tax authority, the state board or the state bar.

Tax preparation questions

Does a preparer have to sign my return?

Paid preparers are generally required to sign. Ask your preparer.

Can I trust a preparer who promises a big refund?

Be cautious. A preparer cannot honestly promise a result before reviewing your documents.

What if I receive a notice later?

Ask whether your preparer can help, and whether they are authorized to represent you.

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