Seven questions to ask
- Are you a licensed CPA, and who signs my return? CPAs, enrolled agents and attorneys can represent you before the IRS on any matter. Other paid preparers have limited representation rights.
- Do you prepare returns like mine every year? An S Corporation, a Partnership, a New Jersey resident working in New York, or a rental property each have their own traps.
- Who prepares the return, and who reviews it? Many firms use a team. What matters is that a CPA reviews and signs.
- How will we exchange documents? A secure client portal is safer than email, and e-signature saves a trip.
- What will it cost, and is that in writing? Expect an engagement letter with the fee and the scope before any work starts.
- What happens if I get a notice? Ask whether the firm answers IRS and New Jersey letters and how that is billed.
- Do you help during the year? Estimated payments, a new business or a move to another state are easier to plan than to fix.
A worked example: one missed New Jersey deduction
A married couple in Bergen County earns $180,000 and pays $16,000 a year in property taxes. New Jersey lets homeowners deduct up to $15,000 of property taxes or take a $50 credit, whichever saves more. At their 6.37% New Jersey rate, the deduction is worth far more than the credit.
| Property tax deduction: $15,000 × 6.37% | $955.50 |
| Property tax credit instead | $50.00 |
| Lost each year if the credit is taken | $905.50 |
| Over three years | $2,716.50 |
It is a routine line on a New Jersey return, and it is exactly the kind of detail a preparer who mostly files in other states can miss. The same goes for the credit New Jersey residents take for tax paid to New York.
Red flags
- A fee based on the size of your refund, or a promise of a bigger refund before anyone sees your documents.
- A preparer who will not sign the return they prepared.
- A request to deposit your refund into their account.
- No engagement letter, and no clear answer about who handles notices.
This guide is general information based on the law as of the date above, not advice for your situation. Tax rules change, and the right answer depends on your numbers.