Correction appended.
With W-2s slithering into your mailbox, it's time to break out the tax forms.
Or call a tax pro.
As when you're hiring a financial adviser or doctor, you shouldn't pick just anyone. Shop around. Interview the prospects in person. Check their background with, in Oregon, the licensing agencies. It might reduce the chances of a future audit or April 15 billing dispute.
You, the computer or the tax pro
Last year I covered the
. I found few reasons to pay for software to prepare your taxes, provided your situation is straightforward.
"If you have a really, really simple tax return, I almost hate to see people go to a tax professional," said Kathy Howell, a former senior tax consultant for the Internal Revenue Service, now retired.
When your taxes get complicated, it's time to get personal -- and picky. By complicated, I mean you have a small business or self-employment income, several rentals, depreciable assets or lots of capital gains and losses.
Even with software, these wrinkles enhance the chance you'll enter an amount incorrectly, misinterpret a question or -- the horror! -- miss a tax break.
So, where to start looking for a tax pro? Ask a friend or someone whose judgment you trust whom he uses. If you shop around, interview more than one in person. You'll get a better feel for pedigree, fees, specialties and personality.
"Some tax pros are not great communicators," said Joseph Anthony, a licensed tax consultant with
in Portland. "You should know going in what you should expect from your tax pro."
Some questions to ask:
What's your experience?
Last week, I explained the difference between a
. After you have their credentials, ask how long they've been preparing returns.
If the answer is less than three years, they shouldn't do complicated returns, said Dale Marino, president of the
. Marino also suggests asking how many continuing education hours they completed last year and how many they were required to take.
"If the hours completed are far greater than the hours required, then you found someone who is serious about helping clients pay the least tax," Marino said.
What are your specialties?
Some preparers specialize in doing taxes for military members, small-business owners and freelancers, for instance.
How much will this cost?
Absolutely discuss this upfront. Tax pros charge by the hour, by the form or a combination of the two. Most don't post rates or quote a firm fee beforehand. Surprises occur, they say, requiring them to compile more information, invest more time and add fees.
"It's kind of like having a car done. You should get an estimate first," said Ron Wagner, director of the
. "They're not going to be able to give you an exact amount. But get an idea what the normal charges are for a return that's similar to yours."
CPAs should give you an engagement letter detailing the work they'll perform, who'll do it and the cost.
State regulators have little authority over fee disputes. One exception: If licensed tax consultants advertise a coupon or discount, Oregon requires their typical rates be posted "in plain public view," Wagner said.
What's a reasonable cost? The National Society of Accountants estimates the average cost of preparing a 1040 with an itemized Schedule A and a state return at $233 this year. Without itemizing, the average cost is $128, the society said.
How often will you communicate with me?
Do you ask lots of questions or expect prompt responses to messages? Be sure they're aware of that. Tax time is a busy time for them. Ask how quickly they'll respond to your inquiries. If you don't like the answer, go elsewhere.
"People think we're a number-crunching industry," Anthony said. "We're not. We're a service industry. I think people deserve to expect good service."
How will you secure my identity?
Tax preparers now must file all returns electronically. They keep your W-2 information for several years. "It's like a candy store for identity theft," Marino said. He suggests you ask about security measures in place to protect such information. Look for lockable file cabinets, an office alarm system and a paper shredder, he said.
How do you spend your summers and falls?
Some tax pros work only from January to April. If you expect to file an extension or need tax planning later in the year, you'll want year-round access. You'll also get a more committed professional.
Check licensing and complaints
This isn't as easy as it should be.
For a CPA, contact the
. Ask whether the individual has any complaints. You can't read the complaint or case file until it's been dismissed, settled or scheduled for disciplinary action.
By April, the board should have searchable complaint histories
, agency Executive Director Patrick Hearn said.
The
, unfortunately, won't acknowledge the existence of a complaint against
until its investigation has been closed or settled. After that, you can find out the nature of the complaint and why it was resolved the way it was, said Monica Walker, the agency's senior compliance specialist.
Ask a volunteer
If you can't afford to pay a pro, you can still get personal help.
,
and the IRS
offer free tax preparation at dozens of sites around Oregon. See the accompanying box for sites and contact information.
Invariably, when I mention these free programs, I get an anonymous phone call urging me to look into the qualifications of the volunteers and accuracy of their returns.
"Quality at one point and time was a problem," said Howell, the former IRS specialist who now volunteers at some sites. "Over several years now, they've really made great strides in improving the quality of their returns. Every return prepared is gone over a second time. It's prepared again, basically, to catch errors."
Volunteers now go through annual training and testing using IRS-provided materials, Howell said. "You cannot be a tax preparer at a volunteer site unless you've passed the required test."
After all, even tax pros make mistakes.
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The article reflects a correction published Feb. 2
: The Oregon Board of Tax Practitioners will publicly acknowledge the existence of a complaint against a licensee before its investigation is complete. Brent Hunsberger's Sunday Business column was incorrect on that point and also misstated the name of the board.