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3 Questions to Ask Before Hiring a Tax Professional

Thinking of having someone else do your taxes this year? Be sure to get some answers first.

With tax season just around the corner, now’s the time to start thinking about not just when you’ll file your taxes, but how. In fact, you may be looking at hiring a professional to file your return on your behalf — and if so, you wouldn’t be alone. A 2016 GoBankingRates study found that roughly 37% of Americans pay a professional to file their taxes, while 43% file themselves, either using digital software or by hand.

While there are benefits to outsourcing your taxes, you should know that not all tax professionals are created equal. There are numerous factors to consider when choosing a tax preparer, with experience and credentials being among the most important. Before you hire someone to do your taxes, be sure to ask the following key questions.

Couple meeting with an accountant
IMAGE SOURCE: GETTY IMAGES.

1. What are your fees?
Ask a tax preparer what he or she charges, and you may not get a straight answer. That’s because fees typically depend on the complexity of your return and number of additional forms or schedules that need to be filed. If you’re filing a return in multiple states, that could add to your cost as well.

You should also be aware that while some professionals charge a flat fee for their services, others charge by the hour. Some tax preparers even calculate their fees as a percentage of whatever refund you get, but you may want to steer clear of those. First, a professional who’s counting on a refund to earn a fee might take certain liberties with your return, and getting overly aggressive with deductions can land you on the dreaded IRS audit list. Furthermore, even if you have a professional sign off on your return, if you come to owe the IRS money, you’ll be the one writing that check.

Furthermore, if you’re due a significant refund, you could lose out by paying on a percentage basis. The average American’s tax refund last year was $3,120, and if you hire a professional who takes a 15% cut of that amount, you’ll wind up paying $468. However, that fee might well exceed what the typical tax filer pays to have his or her return taken care of. The National Society of Accountants reports that its members charged the following fees, on average, in 2014:

$159 for Form 1040 with a state return and no itemized deductions
$273 for Form 1040 with a Schedule A (itemized deductions) and state return
$447 for Form 1040 with a Schedule A, Schedule C (business income), and state return
When you compare a $468 fee to these numbers, it certainly doesn’t look like a bargain — especially if you’re dealing with a simple return. That’s why in most cases, you’re better off finding a professional who charges a flat fee.

2. What documentation will you need from me?
Many taxpayers are shocked to learn that they’ll still be the ones responsible for gathering the right paperwork even when they hire a professional. But if you’re thinking that hiring someone will exempt you from the often-tedious task of having to gather bank statements, paystubs, 1099 forms, and the like, think again. Asking this question might therefore help you come to realize that a professional may not be worth the money — because if you have a fairly simple return, hiring a tax preparer won’t necessarily save you much time.

On the other hand, if your taxes are complicated and you feel better having a professional tackle them, you’ll still need to know what’s expected of you sooner rather than later. And the earlier you ask, the more time you’ll have to get your paperwork in order.

3. Will you provide audit support?
Though tax audits are fairly uncommon — less than 1% of filers get picked — you can’t rule out the possibility that you might make that list. And while a tax professional can’t necessarily prevent your return from being selected, he or she can provide audit support if your return is indeed flagged.

If you’re going to use a tax preparer, it pays to find someone who’s willing and able to represent you in an audit situation, whether it’s responding to an IRS inquiry by mail on your behalf or representing you at a face-to-face meeting with an IRS agent. Not only should you ask whether you’ll get audit support, but you should find out what, if anything, it will cost you. Some professionals provide this service at an additional price, so know what you’re getting into before hiring an outsider.

The more research you do when choosing a tax professional, the more likely you are to wind up satisfied with your decision. And remember, if you don’t find anyone you like, you do have the option of filing your taxes yourself. Unless your return is notably complex, going that route is a good way to save money and perhaps even learn a little something about taxes along the way.

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Drew Limsky

Drew Limsky

Editor-in-Chief

BIOGRAPHY

Drew Limsky joined Lifestyle Media Group in August 2020 as Editor-in-Chief of South Florida Business & Wealth. His first issue of SFBW, October 2020, heralded a reimagined structure, with new content categories and a slew of fresh visual themes. “As sort of a cross between Forbes and Robb Report, with a dash of GQ and Vogue,” Limsky says, “SFBW reflects South Florida’s increasingly sophisticated and dynamic business and cultural landscape.”

Limsky, an avid traveler, swimmer and film buff who holds a law degree and Ph.D. from New York University, likes to say, “I’m a doctor, but I can’t operate—except on your brand.” He wrote his dissertation on the nonfiction work of Joan Didion. Prior to that, Limsky received his B.A. in English, summa cum laude, from Emory University and earned his M.A. in literature at American University in connection with a Masters Scholar Award fellowship.

Limsky came to SFBW at the apex of a storied career in journalism and publishing that includes six previous lead editorial roles, including for some of the world’s best-known brands. He served as global editor-in-chief of Lexus magazine, founding editor-in-chief of custom lifestyle magazines for Cadillac and Holland America Line, and was the founding editor-in-chief of Modern Luxury Interiors South Florida. He also was the executive editor for B2B magazines for Acura and Honda Financial Services, and he served as travel editor for Conde Nast. Magazines under Limsky’s editorship have garnered more than 75 industry awards.

He has also written for many of the country’s top newspapers and magazines, including The New York Times, Washington Post, Los Angeles Times, Miami Herald, Boston Globe, USA Today, Worth, Robb Report, Afar, Time Out New York, National Geographic Traveler, Men’s Journal, Ritz-Carlton, Elite Traveler, Florida Design, Metropolis and Architectural Digest Mexico. His other clients have included Four Seasons, Acqualina Resort & Residences, Yahoo!, American Airlines, Wynn, Douglas Elliman and Corcoran. As an adjunct assistant professor, Limsky has taught journalism, film and creative writing at the City University of New York, Pace University, American University and other colleges.