How to Find a Tax Advisor

How Do You Know if You Need a Tax Advisor?

You might need a tax advisor if planning for taxes and preparing your tax return are too complicated for you to do yourself. Doing your own taxes may be simple enough if you only report wages from a W-2 and claim the standard deduction. But if any of the following situations applies to you, the advice of a tax pro might be in order.

• You own a business, are self-employed or do gig work. Calculating taxes on business or self-employment income can be complicated. You'll need to track income and expenses, and account for complex deductions like home office expenses. A tax advisor can help you set up basic accounting so you can report your income and expenses accurately, and pay quarterly estimated taxes if necessary.
• You have investment income. A qualified tax pro can help you accurately report capital gains and losses, qualified and nonqualified dividends, interest and more—and help you correctly categorize each. A tax advisor may also have planning tips that can save you money going forward.
• You've had a major financial event. Maybe you've inherited property or investments. Or you got married, adopted a child or accepted a job working abroad. Perhaps you're thinking seriously about retirement and need help understanding how taxes will impact your retirement finances.
• You itemize your deductions. Itemizing lets you claim deductions for mortgage interest, qualifying medical expenses, charitable donations and more. You don't need a tax advisor to itemize, but an advisor can help you navigate IRS rules.
• You feel confused or overwhelmed. Getting your tax return right is critical. Getting it wrong, by failing to file on time or submitting erroneous information, could result in penalties, interest charges or worse. Hiring a tax advisor can help ensure you get all the tax breaks you're entitled to while sticking to IRS requirements.

4 Steps for Finding a Tax Advisor

Not sure where to find an advisor you can trust? Here are four steps to finding referrals, checking credentials and following up to verify qualifications.

1. Get Referrals

Asking for recommendations from friends, family members or colleagues is a great place to start. You'll still want to check an advisor's credentials and make sure they're a good fit. But knowing that someone you trust has had a positive experience may increase your chances of having a positive experience yourself, and may decrease the odds of dealing with a tax identity thief.

2. Search Online

In addition to consulting your personal network, try contacting professional associations or your local chamber of commerce for referrals. Here are a few sources that may help.

• American Institute of Certified Public Accountants (AICPA): Find a certified public accountant (CPA) using the AICPA online locator.
• National Association of Enrolled Agents: Search the NAEA's tax expert directory for an EA in your area.
• Your state or local bar association: Reach out to the bar association in your state, county or region for a referral to a tax attorney.
• Local chambers of commerce: Your local chamber of commerce may have a referral for a CPA or tax preparation service nearby.

3. Check the IRS Directory

No matter where you find them, be sure to check a tax advisor's credentials before agreeing to work with them. The IRS maintains a searchable directory of federal tax return preparers that lists tax preparers with IRS preparer tax identification numbers (PTINs). The directory shows the following credentials:

• Preparer tax identification number (PTIN) holders are authorized by the IRS to prepare tax returns.
• Annual filing season program participants have undergone additional voluntary training to prepare for the current tax season.
• Enrolled agents (EAs) are licensed by the IRS. They undergo specialized training and pass a three-part proficiency examination to earn the EA designation.
• CPAs have completed college-level study in accounting and passed the Uniform CPA Examination.
• Tax attorneys can represent clients in court or in an audit. They may also provide tax planning and preparation services.

4. Follow Up

In addition to checking the IRS directory, follow up with providers themselves to learn more about their experience, expertise and process for working with clients. You may also want to check online with the Better Business Bureau or even social media review sites for additional input (if any) on a potential advisor.

What to Ask Your Tax Advisor

When you're ready to meet, make a list of questions that are specific to your situation. You may also want to ask the following questions to learn more about a tax preparer.

• What is your background and experience? What credentials do they have? How long have they been preparing taxes professionally?
• Do you have an area of specialization? Some tax preparers work with specific businesses or industries; others may have informal areas of expertise, such as cryptocurrency investments. If you have a specific need, now is the time to ask about it.
• How does the tax preparation process work? What information and documents will you need to provide? Will you meet in person or exchange information online? Is the process secure?
• What is your fee structure? Some tax preparers charge a flat fee for tax preparation. Others may charge by the hour or by the forms filed. Fees should be transparent from the get-go so you can estimate costs in advance.
• Will you represent me if I'm audited? Enrolled agents, CPAs and attorneys can represent you in an IRS audit; some tax preparers cannot. Also, tax preparers who work only during tax season may not be available to help you after your taxes are filed.

Signs of a Good Tax Advisor

In addition to solid credentials, here are a few indicators that a tax advisor is worth their salt.

• Experience: An experienced tax advisor is familiar with the tax laws, deductions and credits that apply to you and your individual situation.
• Communication: Look for an advisor who can explain tax concepts in plain language and answer questions you have about your return.
• Integrity and ethics: Your tax preparer should handle your information securely and confidentially. They should follow tax laws closely at all times.
• Availability and timeliness: A good tax preparer has time to meet with you and to complete your return before the IRS filing deadline.
• Planning and advice: In addition to preparing your return, you may want a tax advisor to provide proactive tax planning and advice throughout the year.

Warning Signs of a Bad Tax Advisor

First, check and double-check credentials before you hand over any information. Scammers may pose as tax preparers to gain access to your personal identifying information (such as your Social Security number), then use the information to commit tax identity theft.

Additionally, be on the lookout for these red flags that may signal problems with a prospective advisor:

• They won't sign your tax return or include their PTIN number. Tax preparers are required by law to sign the return and provide their PTIN. Refusing to do so could be a sign that they've cut corners on your tax return and want to avoid the IRS.
• They ask you to sign a blank tax return. Your advisor should review your completed return with you before it's e-filed, not ask you to preauthorize a blank return.
• They base their fees on the size of your refund. This may incentivize a preparer to claim deductions and credits you aren't entitled to, which the IRS may later question or disallow.

Consider Free Tax Preparation Options

Free or low-cost tax preparation help may be available to you, especially if you have limited income, are disabled or age 60 and older, or serve in the military. Many of these services are offered in partnership with the IRS. Here are a few to consider.

• IRS Free File provides access to guided tax preparation software from their partner providers. Using IRS Free File software is free if your adjusted gross income meets IRS guidelines (up to $79,000 in 2023).
• IRS Direct File is a tax preparation app that allows you to prepare and file your return directly with the IRS. After a successful pilot in 2024, the IRS expects to launch IRS Direct File permanently in time for the 2025 tax season.
• The Volunteer Income Tax Assistance (VITA) program provides free tax help to people with disabilities, limited English-speaking skills or who make $64,000 or less. Use the VITA locator tool to find VITA services in your area.
• GetYourRefund is a virtual version of the VITA program that connects you with an IRS certified tax preparer for free.
• Tax Counseling for the Elderly (TCE) offers free tax help for people aged 60 or older, particularly those who have questions about retirement and pensions. TCE and VITA volunteers must take and pass tax law training that meets or exceeds IRS standards.
• Military OneSource MilTax is a suite of free tax services provided by the Department of Defense for service members, immediate family and survivors. Services include tax preparation software, in-person tax prep and assistance, access to tax consultants and access to financial counselors and online resources.
• Free versions of popular tax preparation software are available online. Free versions are often for e-filing simple returns; if you need to file multiple tax forms (such as Schedule C for self-employment income) or want personalized advice, you may need to upgrade to a paid version.

The Bottom Line

Finding a tax advisor who can help you file your tax return correctly and on time can feel life-saving. Take the time to seek out referrals, check credentials and ask questions to make sure the tax pro you hire is a great fit. Paying taxes is never fun, but it can be significantly less painful with the right help.