What To Know Before Hiring Someone To File Your Taxes

Hiring a tax professional can save you time, reduce stress, and help ensure your return is accurate. But choosing the right person or firm requires understanding what different tax professionals offer, what to expect in terms of fees, and how to spot red flags. With various credential levels, pricing models, and service scopes, the decision isn't always straightforward.

Whether your finances are simple or complex, knowing what credentials matter, what questions to ask, and how to protect yourself will help you make a confident choice. This guide walks you through the key considerations before you sign on with someone to handle your taxes.

Understanding Tax Professional Credentials

Not all tax professionals are created equal. Any tax professional with an IRS preparer tax identification number (PTIN) is authorized to prepare federal tax returns, though tax professionals have differing levels of skills, education and expertise. Understanding the different credential levels will help you evaluate whether someone is qualified for your needs.

CPAs (Certified Public Accountants)

A Certified Public Accountant (CPA) is licensed by a state board after completing a degree in accounting, passing the CPA exam, and maintaining ongoing continuing education requirements. CPAs have unlimited representation rights before the IRS and may represent their clients on any matters including audits, payment/collection issues, and appeals. CPAs can be beneficial for individuals and businesses dealing with complex financial matters, and those managing large assets, multiple income sources or business operations may benefit from year-round accounting and strategic tax planning.

Enrolled Agents

Enrolled agents pass a rigorous exam and are licensed by the IRS with the highest tax credential, and they're recognized as tax experts and must meet continuing education standards. Like CPAs, enrolled agents have unlimited representation rights before the IRS, meaning they can represent clients at all administrative levels—including audits, collections, and appeals. Enrolled agents can handle complex tax scenarios at a lower cost than CPAs.

Tax Preparers and Non-Credentialed Professionals

To become a tax preparer, you must satisfy a few IRS requirements, including passing the IRS suitability check and obtaining a preparer tax identification number (PTIN)—a post-secondary degree is not required. Non-credentialed return preparers are those who do not possess one of the above credentials and are not required to have any training in tax law and are not subject to Circular 230, but they must still have a valid preparer tax identification number (PTIN) to prepare your return.

Non-credentialed return preparers have no representation authority and are only authorized to prepare your tax return. This means if you face an audit or dispute with the IRS, they cannot represent you.

Evaluating Your Tax Situation's Complexity

The complexity of your financial situation determines what level of professional you need. A tax preparer is typically a good choice for individuals with straightforward tax returns, and if your income comes primarily from wages, you take standard deductions or you only need help filing annual tax returns, a tax preparer can efficiently and affordably handle your needs.

By contrast, if you're self-employed or derive income from rental real estate, assets that deplete or depreciate, partnerships, or foreign sources, your costs may be much higher than the average tax preparation fees and complexity increases significantly. In these cases, a CPA can be beneficial for individuals and businesses dealing with complex financial matters, and those managing large assets, multiple income sources or business operations may benefit from year-round accounting and strategic tax planning, including financial statements, audits, tax compliance and estate planning.

Fee Structures and Cost Considerations

Tax preparation fees vary widely and depend on multiple factors. The price of tax preparation depends on several factors, including the complexity of your return, your geographic location, and how well-organized your documents are. Understanding the typical range and what drives costs will help you budget appropriately.

Tax preparers use various methods to charge, including a minimum fee plus charges for complexity, a set fee per form, or an hourly rate. Before hiring someone, ask how they charge and whether the quoted fee includes all services or if additional costs may arise.

The cost of living varies greatly depending on where you are located — and the cost of tax services reflects these differences, and if you live in an urban area with high living costs, you can expect to pay more than someone living in a rural location.

Questions To Ask Before Hiring

Once you've narrowed down your options, ask detailed questions to ensure the professional is a good fit for your needs and work style.

• 🔍 What are your credentials? Verify they have a PTIN and ask about any CPA, EA, or professional certifications.
• 🔍 How do you charge? Understand the fee structure—hourly, flat fee, per form, or tiered pricing—and request a written quote.
• 🔍 What does your fee include? Does it cover follow-up questions, amended returns, or tax planning advice?
• 🔍 Are you available year-round? Make sure the preparer is available year-round, as if questions come up about a tax return, taxpayers may need to contact the preparer after the filing season is over.
• 🔍 Will you represent me before the IRS? If you might face an audit or dispute, verify whether they have representation rights.
• 🔍 How do you stay current with tax law changes? Ask about their continuing education and how they keep up with updates.
• 🔍 What if my situation changes unexpectedly? Clarify how scope changes are handled and whether costs might increase.

Verifying Credentials and Checking Background

Before trusting someone with your financial information, verify their credentials and check their professional history.

The IRS provides a Directory of Federal Tax Return Preparers with Credentials and Select Qualifications that can help you find preparers in your area who currently hold professional credentials recognized by the IRS, or who hold an annual filing season program record of completion. Review the preparer's history and taxpayers can check with the Better Business Bureau for information about the preparer, including any disciplinary actions and the license status for credentialed preparers.

Other resources include the State Board of Accountancy's website for CPAs and the State Bar Association for attorneys. Many tax professionals also belong to professional organizations; verify their membership status through those organizations' websites.

Red Flags and Warning Signs

While most return preparers are dedicated to preparing accurate returns, unfortunately there exists a population of unscrupulous preparers who do not promote your best interests and in fact can cause serious financial harm to you if you are not careful.

Be cautious if a preparer:

• Promises a refund of a specific amount before reviewing your records.
• Rushes through your documents without asking questions or requesting documentation.
• Won't discuss deductions or expenses with you in detail.
• Pressures you to make unrealistic or aggressive claims on your return.
• Won't provide you with a copy of your completed return before filing.
• Wants you to sign a blank return or one you haven't reviewed.
• Requires unusual payment methods or refuses to provide a written contract.
• Has disciplinary actions or complaints on file with professional boards.

Organization and Documentation You'll Need

The better organized your documents are, the more efficiently your tax preparer can work and the lower your costs may be. If your tax documents are organized and have receipts to prove tax deductions, the tax professionals you work with will spend less time sorting, categorizing, and chasing details, which helps control personal tax preparation fees and keeps business tax preparation fees from ballooning.

Gather and organize:

• Wage documents (W-2s, 1099s, other income statements)
• Receipts and records for deductible expenses
• Previous year's tax return
• Mortgage interest statements and property tax records (if applicable)
• Investment and brokerage statements
• Business income and expense records (if self-employed)
• Student loan and education expense documentation
• Charitable donation receipts

Building a Long-Term Relationship

Tax preparation doesn't have to be a one-time transaction. A good tax professional can provide year-round value, including tax planning that minimizes your liability and keeps you prepared for what's ahead.

Tax preparers can provide planning recommendations with the return; a return that just reports what happened provides less value than one that identifies opportunities for next year. When you find someone you trust, maintain the relationship. Consistent tax planning is far more effective than handling taxes in isolation each year.

Communication is key. Share any major life changes—a new job, business launch, inheritance, or significant financial decision—so your preparer can advise you proactively. This ongoing relationship also helps ensure your tax preparer understands your full financial picture and can identify opportunities you might otherwise miss.

Hiring someone to file your taxes is a practical decision that depends on your situation's complexity, your budget, and the credential level you need. By understanding the different types of tax professionals, asking the right questions, and protecting yourself from red flags, you can find someone who handles your taxes with accuracy and care. Whether you work with a basic tax preparer or a comprehensive CPA, the goal is peace of mind and compliance with tax law.