How To Choose A Professional Tax Advisor To Help Plan Your Retirement

In previous articles, we’ve talked about the importance of tax planning. The next step is choosing a tax advisor who understands how your federal benefits work. An experienced tax professional can help you develop strategies that minimize federal and state income taxes on your retirement income. Here are questions to ask before you add a professional tax advisor to your retirement-planning team.

Always Ask About Their Credentials

Make sure your tax advisor has the IRS Preparer Tax Identification Number (PTIN). This is an IRS requirement for anyone who charges a fee for preparing tax returns. Other designations professional tax advisors may hold include: a CPA, a law degree (especially tax law), an IRS Enrolled Agent credential, and a record form for the completion of the IRS Annual Filing Season program.

Check their membership in professional organizations. Members of the American Institute of Certified Public Accountants or the National Association of Tax Professionals need to meet specific certification requirements before they can join.

“If you’re audited by the IRS, or if income tax issues arise with your state, you want a tax advisor who promises to have your back.”

If You’re Audited, Will They Represent You To The IRS?

This is a crucial question to ask. Enrolled agents, CPAs, and attorneys have unlimited representation rights before the IRS. However, though tax advisors with these credentials can represent you during audits they can always say, “No.” If you’re audited by the IRS, or if income tax issues arise with your state, you want a tax advisor who promises to have your back. It’s also important to ask about any fees associated with representing you in an audit.

Ask About Their Experience Working With Federal Employees

Since your FERS annuity (pension), Social Security income, and traditional Thrift Savings Plan (TSP) distributions are all subject to federal taxes, a tax professional with experience in federal benefits will be able to address your specific needs and concerns. Make sure they have in-depth knowledge of tax laws, retirement accounts, and the complex rules that govern your federal retirement benefits. Also, confirm that they have experience in tax planning and the ability to work with you year-round. You don’t want someone who’s only available during tax season.

Reach Out To An FRC® Trained Advisor For A Referral

Consider working with a professional who has earned the Federal Retirement Consultant℠ (FRC) designation. In addition to completing comprehensive training in all of your federal benefits, each designee has been fully vetted, including a background check. An FRC® trained advisor can help you assemble a trustworthy retirement planning team that includes a tax pro, an estate-planning attorney, and other experts in your community who understand the needs of federal retirees.