How to Choose a Tax Preparer: Credentials, Fees and Red Flags

When you pay someone to prepare your tax return, you are trusting them with your income details, your Social Security number and often your refund. You are also still legally responsible for what is on the return, even if someone else filled it out. That makes choosing a preparer worth more than a quick search for whoever is closest or cheapest.

This guide explains the main types of preparers, how to check credentials, and what to watch for. It is general information, not tax or legal advice. Tax rules change, so confirm details with the IRS or a qualified professional.

The main types of tax preparers

Anyone who prepares federal tax returns for pay must have a Preparer Tax Identification Number (PTIN) from the IRS. Beyond that, training and credentials vary widely.

Certified public accountants (CPAs)

CPAs are licensed by state boards of accountancy after meeting education, exam and experience requirements, and they must complete continuing education. Not every CPA specializes in tax, so ask how much of their work is tax preparation and planning.

Enrolled agents (EAs)

Enrolled agents are licensed by the IRS itself. They earn the credential by passing a comprehensive IRS exam or through qualifying experience as a former IRS employee, and they must keep up with continuing education. Tax is their specialty.

Tax attorneys

Attorneys are licensed by state bars. Some focus on tax law and are most useful for complex matters, disputes, or situations with legal exposure. Many tax attorneys do not prepare routine returns.

Unenrolled preparers

Many preparers have a PTIN but no professional credential. Some are very experienced, and some take part in the IRS Annual Filing Season Program, a voluntary program built around continuing education. Others may have little training. A few states, such as California and New York, have their own registration or education requirements for paid preparers, so check what applies where you live.

Check before you hire

A few minutes of checking can save a lot of trouble:

• Ask for their PTIN. Every paid preparer must have one and must include it on the returns they prepare.
• Search the IRS Directory of Federal Tax Return Preparers. This free directory on IRS.gov lists preparers who hold credentials recognized by the IRS, such as CPAs, enrolled agents and attorneys, along with those who completed the Annual Filing Season Program. It does not include every PTIN holder, so a missing name is a reason to ask questions, not automatic proof of a problem.
• Verify state licenses. Check a CPA with the state board of accountancy and an attorney with the state bar.
• Look for disciplinary history. State boards and bars often publish disciplinary actions.
• Read reviews carefully. Look for patterns about accuracy, responsiveness and billing.

Who can represent you if the IRS has questions

Preparing a return and representing you before the IRS are different things. If you get an audit letter or a notice you need help with, your preparer's credentials matter.

• CPAs, enrolled agents and attorneys generally have unlimited representation rights. They can represent you on audits, payment and collection issues, and appeals.
• Unenrolled preparers have limited rights. Those who completed the Annual Filing Season Program may represent clients in limited situations, such as an examination of a return they prepared and signed. Preparers without that record generally cannot represent you.

Ask every preparer what happens if you receive an IRS notice. Will they help? Is that included in the fee or billed separately? Will they be reachable after tax season ends? To act on your behalf, a representative typically needs your signed authorization on IRS Form 2848, Power of Attorney and Declaration of Representative.

Understanding fees

Fees vary with the complexity of your return, the forms involved, your location and the preparer's credentials. Common approaches include a flat fee per return, a fee per form or schedule, and hourly billing for more complex work. Ask for an estimate up front and what could change it.

Be cautious about any preparer whose fee is a percentage of your refund. The IRS advises taxpayers to avoid preparers who base fees on the size of the refund, because that rewards a bigger refund rather than an accurate return.

Filing and signing your return

Most paid preparers are generally required to file returns electronically, and e-filing with direct deposit is usually the fastest way to get a refund. Your refund should go directly into your own bank account, not the preparer's. Be wary of anyone who wants your refund routed through them.

Before you sign, review the completed return. Ask about anything you do not understand, check that your bank account numbers are correct, and confirm that the preparer has signed the return and entered their PTIN. Keep a copy for your records.

Never sign a blank return

Never sign a blank or incomplete return, or an e-file authorization, before you have reviewed the finished return. Signing blank forms gives someone else control over what is filed in your name.

Questions to ask a tax preparer

1. What credentials do you hold, and what is your PTIN?
2. How many returns like mine do you prepare, for example with self-employment income, rental property or investments?
3. How do you set your fees, and can you give me an estimate in writing?
4. Will you e-file my return, and will my refund go directly to my account?
5. What documents do you need from me?
6. Who will prepare my return, and does anyone review it?
7. How do you protect my personal information?
8. If I get an IRS notice or audit, will you represent me, and what does that cost?
9. Do you prepare state returns, and for which states?
10. How can I reach you after tax season?

Red flags

• A fee based on a percentage of your refund.
• Promises of a bigger refund than other preparers before they have seen your documents.
• Willingness to file using your last pay stub instead of your Form W-2.
• Asking you to sign a blank or incomplete return.
• Refusing to sign the return or provide a PTIN, sometimes called a ghost preparer.
• Wanting your refund deposited into their account.
• Suggesting you claim credits or deductions you do not qualify for.
• No clear way to reach them after the filing deadline.

If you believe a preparer has acted improperly, the IRS accepts complaints on Form 14157, Return Preparer Complaint.

Get organized first

Even the best preparer works only as well as your records. Bring last year's return, all income forms such as W-2s and 1099s, records of deductible expenses, and any letters you received from the IRS or your state. Starting early gives you time to ask questions and fill gaps.

Find a tax professional near you

Browse tax consultants and accounting firms on Directory For USA, compare reviews and services, and check each preparer's credentials before you share your documents. If you need year-round help, such as bookkeeping for a small business, an accounting firm may be a better fit than a seasonal preparer.