There are a number of terms for professionals that specialize in preparing tax returns. These include registered tax preparers, certified public accountants, enrolled agents and tax attorneys. Deciding which type you need is one of the most important financial decisions you can make. So how do you know if you need a certified tax accountant here in Minneapolis to handle your taxes?

If your tax return is complicated, you are best served by choosing a Certified Tax Accountant. If you own a business, have just gone through a complicated divorce, or handle extended family business, you should find a Certified Public Accountant that specializes in taxes. CPAs are licensed and certified to deal with a wide range of accounting issues. A Certified Tax Accountant carries that one step further by focusing on the ever changing rules of the IRS and the State of Minnesota.

Before you Choose a Certified Tax Accountant

Your first step should be to consult with a Certified Tax Accountant and assure yourself of several things:

Qualifications – What is their Preparer Tax Identification Number? New IRS regulations require all tax preparers that receive a fee to have a valid PTIN. Does this person hold a current CPA? All CPAs are required to retest every few years to maintain their certification.
History – Check with the Better Business Bureau to ensure they have been no complaints against them. It is also wise to check with state boards of accountancy for certified public accountants and the IRS Office of Professional Responsibility for enrolled agents. This will assure you there are no disciplinary actions and the tax accountant’s license is valid.
Fees – Do not use Certified Tax Accountants that base their fees on a percentage of your refund. One should also be cautious when they make claims to be able to obtain larger refunds than other Certified Tax Accountants.
Availability – Ensure that the Certified Tax Accountant will be accessible. Will you be able to contact them after your return has been filed should questions arise? You should have a sense this is a person who will be there for you should you require representation before the IRS.
Questions – Reputable Certified Tax Accountants will request you to provide appropriate records and receipts. They will ask an array of questions to properly determine your income, qualifications for expenses, deductions, and all other necessary information.

Once You Have your Certified Tax Accountant

Never sign a blank return
Oversights can happen, but a tax preparer should never let you leave without signing all forms. Conversely, avoid Certified Tax Accountants that ask you to sign a blank tax form.

Review the entire return before signing it
Read everything and ask questions about anything you don’t understand. If there is anything recorded that makes you feel uncomfortable, don’t sign until those issues are addressed.

Make sure your Certified Tax Accountant signs the form and adds their PTIN
Paid preparers are required by law to sign returns and include their Preparer Tax Identification Number. Your Certified Tax Accountant must also give you a copy of your return for your records. Do remember: it is your responsibility to ensure all information provided is factual and accurate.

There are many things your tax preparer can do for you in ensuring your tax returns are accurate and that you have claimed all proper deductions. However, there are also a number of things you can do for yourself that can lessen your tax burden.
By working with your employer, you can get a head start on tax planning here in Minneapolis. Here are some options for tax-free income your employer can provide. Be sure and check with your tax preparer about all of these to make sure they apply to you.

Education

An employer can provide as much as $5,250 per year in educational aid when you enroll in undergraduate or graduate courses. As long as your employer doesn’t mind, the IRS makes no requirements the education is job related. That means you can take advantage of continuing your education with what amounts to a tax-free pay raise.

Public Transportation or Parking

If you use public transportation to go to work an employer can purchase fare tickets, tokens, or passes for you. Up to $230 per month is tax free for funds spent on the bus, subway, train, vanpool, or ferry. If you commute by car to work and pay parking fees, up to $230 per month can be reimbursed tax free by your employer. If you ride a bicycle to work your employer can reimburse you $20 a month, tax-free, towards the cost of repairs, maintenance, and storage.

Carpool

If you own your car and use it to carpool fellow employees to work, you can deduct commuting expenses from your tax bill. This does not apply if you travel alone. But any monies paid to you by your fellow carpoolers for gas, repairs, and other operating costs are not counted as taxable income. Unlike the other deduction mentioned here, this is not tax free income paid by your employer but rather by passengers in your car pool.

Health Insurance Premiums

If you aren’t insured by your employer and your insurance premium is $3,360 annually, or $280 a month, your real cost is much higher than that. With this premium, the actual cost would be $4,480 per year. If you are insured through your employer, you both achieve the same benefit. The employer pays less in salary and your income increases because the insurance payments are fully deductible. Additionally, payroll taxes on insurance premiums do not apply.

Term Life Insurance

An employer is allowed to pay premiums for your term life insurance coverage, up to $50,000. The employer can deduct the cost and you gain tax-free income.

Here are some additional reimbursements you can receive from an employer that are considered tax free:

• $5,000 for child care assistance
• Adoption assistance and reimbursements
• Meals provided at the workplace
• Athletic facility privileges
• Cash rebates from dealers or manufacturers
• Health Savings Account contributions
• Gifts, bequests, and inheritances
• Worker’s compensation
• Welfare benefits
• Retirement planning services
• Court-awarded compensatory damages

Again – Be sure and check with your tax preparer about all of these to make sure they apply to you!

Many people are not aware that the Internal Revenue Service does not certify tax preparers. And, though many states require their own licensing requirements, Minnesota does not. This quick guide to choosing a certified tax preparer in Minneapolis will help you as you seek the right person to handle your tax returns.

Your Options

Since Minnesota does not mandate licensing requirements it is important to ensure the tax preparer you choose can handle your needs. Options to choose from in a professional tax preparer include:

• Chain and local storefronts – Nationally advertised chains such as H&R Block and Jackson Hewitt as well as locally owned storefront operations are often manned by preparers with a wide range of qualifications. Some are credentialed CPAs while others may have no certification at all. Should you be audited, the person that prepared your tax return may not be authorized to represent you before the IRS.




• Certified financial planners – Many organizations now offer certification for a “certified financial planner.” Tax preparers with this designation often have expertise in investments, financial planning, and taxation. But such certifications do not guarantee expertise in tax preparation and representation.




• Enrolled agents – An enrolled agent must pass an exam strictly on taxes administered by the IRS. An enrolled agent is certified to represent you before the IRS and in tax court.
• Certified Public Accountants – Many CPAs specialize in taxation and can represent you before the IRS. Be sure and choose a CPA who specializes in tax preparation.

Always Ask Questions

Whoever you chose as your tax preparer will become your front line of representation before the IRS so be sure and ask some probing questions before making your choice. When choosing a certified tax preparer in Minneapolis, be sure and get the answers to the following questions.

• Do you know the requirements of all the states where I am required to file? – If you have just moved from another state, live in Minnesota but operate a business in another state, or have any financial interests in others states, this is the first question a tax preparer must answer.
• How much experience do you have with my type of return? – If you have a simple 1040, then almost any qualified tax preparer will do just fine. But if you have a family trust, a partnership, or other business ventures, makes sure the tax preparer you choose has current experience with your particular needs.
• Can you represent me if I am audited? – Not only will this answer if this person should represent you, but it will allow you to find out how often his or her clients have been audited. Someone who generally prepares normal 1040s should have very few audits. While business and certain high-risk taxpayers will received more audits, the percentage of audits should still be relatively low.
• What and how do you charge? – Find out if charges are by the hour or by the form and what extra fees apply to organizing your records. Also ask if such charges will be specified in writing.

You’re the Boss

Remember; the tax preparer you choose is working for you. Don’t hesitate to establish what you expect. Good communications is essential, so make sure your preparer is ready to call you should questions arise. You don’t want anyone jumping to conclusions without calling you first. If a tax preparer has to make a judgment call in a complex return, insist it be made known to you in writing.

The odds of ever having to deal with an auditor in your Minneapolis business are statistically low. But odds are never comforting if you are the one being audited. Like it or not, the Internal Revenue Service has legal grounds to audit any tax return it chooses for any reason it chooses. Therefore, it always pays to be prepared.

What many tax payers do not understand is that an audit is not personal. Most audits are initiated as the result of an IRS computer system score in which a taxpayer has a high likelihood of inaccuracy. If an IRS official reviews such a return and agrees it should be examined then an audit will follow. Such audits are intimidating because the burden of proof rests on the taxpayer. The person audited must prove the information on their return is accurate and the taxes paid were appropriate.

It isn’t sufficient for your return to be accurate. You must prove its accuracy. Because this is so important you must respond to an auditor the best way possible. Here are some things to remember if you are contacted by an auditor.

NEVER

Panic – Reacting with anger or panic to an IRS audit is only natural. We have all heard horror stories of how an auditor dealt with a business. But, negative emotions are only counterproductive and can lead to bad judgment.

Represent Yourself – People facing audits often only turn to a professional after first attempting to represent themselves. A CPA or Enrolled Agent will often charge more if you have already attempted to represent yourself because of the time they will spend in undoing damage already done.

Charge an IRS Auditor with Harassment – Unless the auditor is completely out of line such charges usually cause more harm than good. If an auditor is acting inappropriately, you should have your certified representative take a complaint directly to the auditor’s group manager or supervisor.

Misrepresent or Lie – Though lying to an auditor may not lead to a criminal referral, it almost always will increase the likelihood of an unfavorable resolution of your case and may expand the audit to earlier tax years.

Sign Anything without Consulting With a Qualified Representative – Never sign anything for an auditor without first speaking to an attorney or a certified tax representative. Auditors or required by law to permit you to consult with a tax advisor whenever you ask for it and particularly before you consent to any tax adjustments or extensions or waivers.

ALWAYS

Respond Immediately – Cooperation always counts in your favor! Whenever you avoid or defy the process, an auditor will assume you have something to hide.

Be Respectful – No taxpayer ever won by making enemies of an auditor.

Consult with your Tax Preparer – After promising to deal with the auditor in a timely fashion your next step is to have the person that prepared your taxes to go over your file with you. Look for detailed explanations of how the preparer arrived at the figures on your return. Reputable preparers will not charge you for this in the case of an audit.

Assemble Organized Records – Preparation and organization enhances your chances of a favorable outcome.

Consult with a CPA or Tax Lawyer – Handling an audit by yourself is unsafe because the risks in the process are too great.

Finding the right tax accountant for your Minneapolis business may be the most important long-term business decision you ever make. The decision of choosing the tax accountant that is both qualified and a match for you and your business is critical. Because your business’ future is directly connected to its finances, it is essential to trust your tax accountant.
Here are a few tips for finding the right tax accountant for your business.

• First, determine what type of tax accounting needs your business has. Look for a tax accountant that specializes in dealing with businesses similar in size and operation to yours. A small business has different demands and needs than of a large corporation. The right tax accountant is one that understands your kind of business.
• The tax accountant you choose needs to be comfortable dealing with the unique financial demands presented by your business. If you are a high volume seller with multiple vendor and customer accounts, your tax accountant should have experience in dealing with such complexities.
• Choose a tax accountant like you would any other employee or independent contractor. Interview multiple candidates, ask directed questions, and check out credentials to find the person most qualified to manage your tax records and filings.
• Certification is essential! The Internal Revenue Code outlines strict rules of tax accounting as found in Section 446 of the IRC. Those rules stress consistency in tax accounting and call for the use of recognized methods of financial accounting. Certification ensures a tax accountant is current with the complexities of those tax codes. An interview should begin with determining if your candidate is certified by a recognized public organization. Qualifications and certifications should be easy to find on every tax accountant’s web site.
• A prospective tax accountant needs to have a good understanding of annual changes to tax laws and codes. Choose a tax accountant that has significant experience handling business tax preparation. The very last thing your business wants or needs is an audit by the state or Internal Revenue Service.
• Determine how much charges will be and whether payments are scheduled on an hourly rate, monthly work, or an annual fixed fee. Be sure and ask what is included in the accountant’s basic rate plan and what services might cost extra. The lowest rate does not always mean the right choice for you.
• Always ask for and check client references. This not only ensures a candidate’s qualifications but also gives you a grasp of the kind of clients he or she is used to working with.
• Make sure the tax accountant you choose is comfortable with the type of accounting software you use.

By following these simple guidelines you will find the right tax accountant for your Minneapolis business. It is important to take the time to find an accountant you are comfortable with because this is one person you will depend on heavily throughout much of the business year. You are opening up the financial heart of your business to someone outside the business so it is important you see your choice as someone you are willing to build a bond of trust with for well into the future.