For most people, selling their home is the largest financial transaction they’ll ever enter into during their lives. Obtaining sound tax advice can be crucial. A tax pro can help you determine whether you’ll owe any tax on the sale; and if so, how much. If you do owe tax, it’s a good idea to have a tax pro prepare your tax return for the year.
Obviously, you want to hire a knowledgeable and experienced tax pro who can capably handle your situation. Get a few names from friends and colleagues with experience in such matters. Then, before you choose which tax pro to hire, ask the following questions:
Anyone who prepares tax returns for money must have a valid PTIN issued by the IRS. Don’t hire someone who doesn't have one.
Tax pros are not all alike. There are four common designations, and their holders differ widely in training, experience, and fees.
You should hire a tax pro with a least a few years of experience.
Steer clear of anyone who’s gotten into trouble. If the tax pro is a CPA, contact your state's board of accountancy to check whether any disciplinary action has been taken against him or her. If the person is an enrolled agent, you can ask the IRS Office of Professional Responsibility whether he or she has been disciplined. An Internet search for the person’s name and “disciplinary” might also turn up such information.
Many tax pros specialize -- for example, some prepare only business tax returns. You’re best off with a tax pro who routinely deals with residential real estate transactions. Handling residential real estate sales is a common tax issue, so you should have no difficulty finding a tax pro with plenty of experience in this area.
If you’re hiring a tax pro to prepare your return, make sure he or she has handled this type of return before.
It’s best to pose the question of fees this way, rather than the ask “How much do you charge?” It’s impossible for a tax pro to give you an exact answer about how much the fee will be until the work is completed. Some tax pros charge by the hour; others charge a standard fee for each tax form they prepare; still others use both methods. Ask for a fee schedule.
This may include such items as your home improvement and repair records.
You should receive a completed copy of your return within a reasonable time, and a time that meets your schedule.
Any tax pro who prepares your return for compensation is required by the IRS to sign the return. Don’t deal with any individual who refuses to do so -- it means they have something they’re trying to hide.
If the IRS audits you or sends you a letter, will the tax pro be available to help you? Will he or she represent you before the IRS? What additional fees will be charged for such help? This is important follow-up.
Not all tax professionals will provide references, for reasons of client confidentiality, but if one does, it’s worth your time to follow up. Also check online resources such as Yelp for reviews.