Tips for Retired Boomers Looking for a Tax Professional

Casey Dowd for Fox Business writes: As boomers enter retirement, they leave behind the annoying alarm clock, rush-hour commutes, stressful deadlines and annoying co-workers. But one thing they can’t avoid is Uncle Sam.

Boomers’ tax obligations can get even more complicated when in retirement, so it is important to choose a knowledgeable tax professional or agency to work with. After all, according to the IRS, tax payers are legally responsible for their tax return, even if it is prepared by someone else.

Jill Franks, certified public accountant and principal at Rehmann, offered the following tips for choosing a tax preparer in retirement:

Boomer: What’s the best way to evaluate a tax preparer’s qualifications and professional history? What should we be looking for when selecting to work with professionals?

Franks: In general, your best choice for a tax preparer is a certified public accountant (CPA) or enrolled agent (EA). Both of these designations require annual continuing education in both their field of practice and ethics in order to maintain the certification.

In addition, most states now require formal background checks before issuing a license. While you can check with the respective governing board for any issues or complaints against a tax preparer, you will more likely learn more from client references, family, friends and business associates who may have worked with this individual previously.

Good sources for tax preparer recommendations are your attorney and your investment broker or advisor. These professionals have usually worked with many of the local tax preparers and can often make a recommendation for a tax preparer who would be suitable for your needs. In addition, these professionals often need to work together, especially when it comes to dealing with estate planning issues.

It’s important that both spouses are comfortable working with the tax preparer (and attorney and investment advisor) – not just the spouse who handles the finances. We all have stories to tell of the "financial" spouse dying first, leaving the "non-financial" spouse with the job of having to suddenly learn about the finances, the taxes, the estate plan, and the investments. It certainly helps a lot to have some level of comfort and trust with the professionals who have been involved previously.

Boomer: What should clients expect to pay in service fees when working with a tax professional?

Franks: This is a difficult question to answer because the fees are based on the complexity of the tax return and where a person is located. For example, a simple return in one locale might run $200 to $300, while that same return would cost $500 to $600 in another locale. Call several tax preparation offices in your town to get an average cost. Larger firms will generally cost more, but they also have a much deeper bench of experience and technical expertise, as well as a protocol for preparing and reviewing the tax return to help minimize any preparer mistakes.

Boomer: Do professional tax preparers e-file tax returns?

Franks: Yes, professional tax preparers e-file most tax returns now – at least those that can be e-filed. We still run into the occasional federal return that can’t be e-filed because it contains a form that hasn’t been authorized for e-filing yet, but the IRS continues to add more of these forms to the authorized list. We also occasionally run into state or city returns that can’t be e-filed. In addition to e-filing, we recommend direct deposit for refunds. This can speed up your tax refund dramatically – to less than 2 weeks in most cases.

Boomer: Would you recommend online tax return programs?

Franks: The online tax return preparation programs work fine for very simple tax returns (maybe just a W-2 and a 1099-INT for bank interest). The biggest problem with these programs is that they are usually in a question/answer format which requires an understanding of tax law that not everyone has. A prime example of this is when Junior, who is away at college, hurriedly files his tax return to get his refund using an online tax program and claims himself as a dependent. Then when his parents file their tax return, claiming Junior as a dependent, it gets rejected by the IRS because their dependent has already been claimed on another return. Then someone (a professional tax preparer) has to sort out who is actually qualified to take Junior as a dependent, and also the best way to file the returns to maximize his educational credits.

Boomer: Is there support offered to handle abusive tax preparers or suspected tax fraud?

Franks: Any complaints against a tax preparer should be made to the state governing board for a licensed professional and/or to the IRS. For a non-licensed tax preparer, all complaints should go directly to the IRS. Both the state governing boards and the IRS have websites which give information on filing a complaint or reporting suspected tax fraud.