Taxes are inevitable, but how much we have to pay can be greatly affected by the knowledge level of the tax preparer.
Anyone with an IRS tax identification number or PTIN is authorized to prepare your federal taxes, but keep in mind that anyone with that qualification is not necessarily at an education and experience level to give you the best information on how to take the most advantage of current tax laws.
One of the key things to consider when determining what level of the tax professional to use is “representation rights”. A preparer with unlimited representation rights credentials can represent their clients on audits, collection accounts and any matters along those lines. This may not be critical if your tax situation is simple but as you grow in assets and income you may need to consider a representative with more education on those matters.
Although theoretically, an enrolled agent can prepare your taxes, you may be missing out on certain legal rights within the IRS guidelines that allow you to put yourself in a better tax situation. So how do you know when it is time to find a preparer with higher qualifications?
You will be aware if your income level is changing or if there has been a substantial change in assets. Taxes are all about what you have. So you do have the ability to know when you may need more help. However, even without a change in income, your retirement, health insurance and property taxes can all change year to year and have a major effect on your tax liability. Most Certified Public Accountants will review your last year’s tax returns for a reasonable fee and be able to give you an idea of any areas that could have been handled differently.
It is advisable to have a tax review whenever you get any indication of legal changes or major tax revisions by the IRS and to use a preparer with the most knowledge about your type of personal or business environment.