Editor’s Note: Every tax season I am often asked for recommendations for tax accountants or tax consultants that can help with both the preparation of tax returns and also provide advice on tax strategy with the goal of lowering future tax payments. It is difficult to vet such tax advisors as I am only one person with one annual tax return (and I enjoy preparing my own return). For many lawyers and other professionals, your taxes may be straightforward and therefore a CPA is not required. The firms listed on this page can help with everything from simply completing the forms and filing your tax return to specialized help in planning and making structural changes to your financial life in order to lower future tax bills.
What is a Tax Accountant?
Tax advisors ran the gamut in terms of services offered. On one end of the spectrum is a tax preparer that does little more than fill out the appropriate forms and file your taxes on your behalf. If you have a simple return and are looking to outsource a boring part of your financial life, these tax preparers can be a great way to offload work at minimal cost to you.
As you move up the totem pole, a tax consultant is able to prepare and file your taxes but can also be available to assist you with specialized advice for tax planning. These tax consultants provide a broad range of services, including financial planning assistance, tax preparation and assistance with any tax issues that might come up in an audit. Tax laws are complex and voluminous (and even more so if you own real estate) and while you only need to know the portions of the tax code that are relevant to you, it’s possible that you are missing out on deductions and other methods for saving money.
Whether you need a tax preparer that can simply help with preparing the return or a tax consultant who can prepare your return and who is available year-round to guide you on tax optimization strategy depends on your particular needs.
Do I need a Tax CPA Professional?
Unless you have a complicated return, most lawyers and other professionals probably don’t need a professional tax accountant to put together their tax returns. However, there may be a few reasons why you’d prefer one anyway.
First, it frees up time for other activities. Most people aren’t thrilled to complete their taxes each year, even if they’re getting a big tax refund. Your time is finite and if you’d prefer to spend it hanging out with your family or on a beach rather than dealing with complex tax issues and completing tax forms, outsourcing the process of preparing your tax returns to a CPA firm is a relatively straightforward and cheap method for outsourcing part of your financial responsibilities.
Second, you might be able to benefit from a professional’s advice as you’re learning the tax code yourself. If you take the time to review the tax return and understand what buttons and levers made your tax bill go down, you’ll know next year which areas of your life to optimize for better tax treatment on tax filings going forward. If you work with a tax consultant who is willing to do more than simply prepare the return (i.e. is available for you to discuss throughout the year with a goal of minimizing your taxes), you’re likely to save even more money.
Third, you might be a business owner with bookkeeping services that help you with tasks like payroll taxes and preparing financial statements. Maintaining tax compliance with your business taxes could easily require the assistance of an accounting firm or use of an independent professional to ensure that your tax accounting is correct each year (although plenty of lawyers use Quickbooks too, so don’t let simply being a business owner mean that you must hire a tax consultant to help with your tax documents).
Here’s a big reason why you might not want to hire a tax accountant to help with your income tax return.
You can learn a lot by filing your own taxes. Ever year I prepare a tax return, I learn something new about the tax code. You don’t have to learn everything in one year, however over time you’ll find that you accumulate knowledge about how the tax code works and this knowledge is helpful in minimizing your taxes going forward. If you outsource the job completely and barely pay attention, you’re not likely to learn anything and won’t be able to optimize your taxes going forward.
How to Find a Tax Consultant
Around 60% of taxpayers use a tax professional to help file their tax returns, according to the Internal Revenue Service. Yet, most people don’t know what questions to ask or how to find the best tax advisor when it comes time to search for one.
If you’re looking for a tax accountant or tax service to help, I recommend that you check out the tax advisors that we’ve vetted and listed below. If you want to find your own tax professional, here are a few tips on how to find the best preparer for you.
1. Ask for a Preparer Tax Identification Number
The IRS requires anyone who prepares a federal tax return for compensation to have a valid PTIN before preparing returns. Make sure your income tax preparer puts his or her PTIN number on your return — the IRS requires that, too. PTINs are free to obtain, so other than identifying your tax preparer, it doesn’t do much to guaranty the services of the tax professional.
2. Require a credential such as a CPA, law license or Enrolled Agent designation
Since a PTIN is relatively easy to get, the next step is to find a credentialed preparer. There is an alphabet soup of credentials but someone who is also a certified public accountant, licensed attorney or an enrolled agent is going to have more training than their peers without any credentials.
How do you find the best tax preparer near you with the credentials you want? One way is to search the IRS’ directory. It includes preparers with PTINs and IRS-recognized professional credentials (such as those discussed above). Volunteer preparers and preparers with just PTINs won’t be in the database.
3. Compare Fees
How much will a tax preparer charge? The National Society of Accountants publishes a survey every two years. The latest data shows the average fee for a Form 1040 with itemized deductions at $294, which also includes handling your state taxes. The average cost to prepare a Form 1040 and a state return without itemized deductions was $188.
If the IRS is auditing you in person (and you’re not at fault), tax preparers charge $150+ per hour to assist with the audit, according to the same statistics from the National Society of Accountants.
Legitimate tax preparers often charge by the hour or by the form. If someone wants to bill you based on the size of your refund, that’s a red flag. The last thing you need is a tax preparer incentivized to cut corners and make questionable decisions.
4. Will your tax accountant help in an audit?
Enrolled agents, CPAs and attorneys with PTINs can represent you in front of the IRS on audits, payments and collection issues, and appeals. Tax preparers who just only have PTINs aren’t allowed to represent you in front of the IRS.
Ask your tax accountant whether he or she represents filers during an audit and how much he or she charges for such representation up front. While you’re unlikely to need it, you don’t want to find out during an audit that either your tax accountant can’t (or won’t) represent you or that to do so they’ll charge more money than you are willing to pay.
(All 50 States)
- Pay what you want model (yes, really)
- Individual, married and small business returns
- Taxes prepared by certified public accountants
- Available for tax consultation
- Available for tax audits
- Prepares 1120-S and 1065 business returns that have the following characteristics: under $250,000 in revenue and $250,000 in assets (S-corporations), and under $250,000 in revenue and $1,000,000 in assets (LLCs/partnerships).