Pick the Right Person to Do Your Tax Return

So you’ve looked at that 1040 and thrown up your arms in disgust. No way can you complete the thing by yourself, you conclude.

But finding a good tax preparer isn’t a snap either. There are different kinds of preparers with different skills and fees. Some are not well qualified. Others may be out-and-out shysters. Just like Medflies, unscrupulous tax preparers keep popping up all over the place.

“Anybody can call themselves a tax preparer, and unfortunately a lot of anybodys do become tax preparers during part of the year,” says Julian Block, a Larchmont, N.Y., attorney and tax expert.

Here are some basic steps for selecting a preparer:

* Decide if you really need one at all. If your itemized deductions don’t go much beyond mortgage interest, or you don’t have much non-wage income, the bookstore tax guides or the Internal Revenue Service’s free Publication 17 can probably do the job.

Also consider adult education classes or seminars given at community colleges, churches or community centers. Call the IRS at (800) 424-1040 for information on free tax-preparation seminars offered primarily for elderly, low-income or small-business taxpayers.

Another reason for doing it yourself: It’s harder to deduct tax-preparation fees these days. Those fees are included in miscellaneous deductions, which now are deductible only to the extent that they exceed 2% of your adjusted gross income.

* Decide what kind of preparer is right for you. Storefront chains such as H&R; Block are good for simpler returns, and their fees tend to be lower. For more complex returns, consider enrolled agents, who must have worked in certain IRS tax occupations for at least five years or have passed a rigorous two-day IRS exam.

Another alternative is a certified public accountant at a smaller accounting firm. Tax lawyers or CPAs at the big national accounting firms should be considered if you have a six-figure income and complicated tax situations.

* Get referrals from friends, relatives or colleagues. Nothing beats a referral from a trusted friend and satisfied customer. Referrals for enrolled agents in your area are available by calling the National Assn. of Enrolled Agents at (800) 424-4339.

* Interview at least three preparers before picking one. Find out about their experience in handling returns of people like you. Get names of their clients and call them. Ask how the preparer will be compensated; find out the fee in advance. Ask if they will accompany you to a meeting with the IRS if you are audited. And be wary of any preparer who doesn’t ask you about your tax situation first before accepting you as a client.

* Screen out fraudulent tax preparers. Just say “no” to preparers who promise you a refund without even looking at your tax situation, or those who base their fee on a percentage of your refund. Don’t allow your refund check to go directly to the preparer. Never fill out a return in pencil, and never sign a blank return. “That’s the equivalent of a blank check,” tax expert Block says.

* Get your records together. Many preparers charge by the hour, so it’ll pay to get your receipts, financial statements and the like organized first.

* Check--and double check--the preparer’s work. If there are errors that result in you owing additional tax, interest or penalties, it’s you--not the preparer--who’s ultimately liable to pay.

* Finally: Don’t procrastinate much longer if you want to file your return by the April 16 deadline. Many good preparers get very busy toward mid-March and can’t handle many more new clients after that.