Can I Switch Tax Preparers Midway Through the Process?

Switching tax preparers midway through the process is possible, but it requires careful handling to avoid complications. Whether you’re dissatisfied with your current preparer or have found someone better suited to your needs, making the transition smoothly is essential to prevent delays or errors in your filing.

Several factors must be considered before making the switch, including agreements you’ve signed, document transfers, and potential financial implications. Managing these aspects properly ensures a seamless transition without unnecessary stress.

Contractual Terms

Before switching, review any agreements you’ve signed. Many tax professionals use engagement letters outlining the scope of work, responsibilities, and termination clauses. These documents may specify whether you owe fees for work already completed or if there are restrictions on ending the engagement. Some agreements include non-refundable deposits or minimum service charges, which could impact your decision.

If your preparer has already started working on your return, they may claim compensation for the time spent. The IRS and state tax authorities do not regulate these agreements, so terms depend on what was agreed upon. If a preparer has completed a draft return but has not yet filed it, they may still charge for the work performed.

Some tax professionals include clauses limiting liability if a client terminates services before completion, meaning they are not responsible for errors if you take partially completed work elsewhere. If your preparer has provided tax planning advice or specific recommendations, those may not transfer to a new professional, potentially affecting deductions or credits.

Document Transfer

Ensuring a smooth transfer of documents is crucial. Your new preparer will need access to key records, including prior-year tax returns, income statements, and supporting documentation. If your previous preparer has already compiled financial data, retrieving it in an organized manner can help prevent delays and reduce errors.

Request copies of all relevant records. If your previous preparer used tax software, they may have generated workpapers, schedules, or electronic files that can be transferred directly. Many tax professionals use software that allows for seamless import of prior-year data, saving time and ensuring consistency. If the original preparer is unwilling to release these files, you may need to rely on your own copies of documents, such as W-2s, 1099s, and receipts for deductible expenses.

Sensitive financial information should be transferred through secure channels such as encrypted email, a client portal, or a secure file-sharing service. The IRS and the Federal Trade Commission emphasize protecting taxpayer data to prevent identity theft and fraud. If your previous preparer used a cloud-based system, ensure that access to your files is revoked once the transition is complete.

Timing Considerations

The timing of your switch can impact the complexity of the transition. If the change occurs early in the tax season, your new preparer will have more time to review your financial situation and ensure compliance with IRS regulations. However, switching closer to the filing deadline—such as in early April for individual tax returns or mid-March for partnerships and S corporations—can create urgency that limits tax planning opportunities.

A late-season switch increases the risk of missing important deadlines, which could result in penalties or interest charges. If you need to file Form 4868 for an extension, remember that it only grants additional time to submit your return, not to pay any taxes owed. The IRS imposes a failure-to-pay penalty of 0.5% per month on unpaid taxes, up to a maximum of 25%. If you are a business owner making quarterly estimated tax payments, switching preparers mid-year could disrupt calculations, leading to underpayment penalties.

State tax deadlines can further complicate matters. While most states align their filing deadlines with the federal calendar, some jurisdictions, such as California and Massachusetts, have specific rules regarding extensions, estimated payments, and late filing penalties. If you operate in multiple states or have complex income sources, your new preparer will need time to assess any state-specific requirements. This is especially relevant for taxpayers subject to state-level pass-through entity taxes or those claiming credits for taxes paid to other jurisdictions.

Fees and Payment Arrangements

Switching tax preparers may result in additional costs beyond any fees owed to your previous professional. Tax preparation costs vary widely depending on the complexity of your return, the type of preparer you hire, and whether additional services, such as tax planning or audit support, are included. The National Society of Accountants reports that the average fee for an individual tax return (Form 1040 with Schedule A) is approximately $323, while more complex returns, such as those for small businesses or rental properties, can exceed $1,000.

Some professionals charge hourly rates ranging from $100 to $400 per hour, depending on their credentials and expertise. Certified Public Accountants (CPAs) and Enrolled Agents (EAs) typically charge more than non-credentialed tax preparers but may offer more in-depth tax strategies. If your previous preparer worked extensively on your return before the switch, you might have already incurred significant hourly charges even if the return was not finalized. Additionally, if your tax situation involves specialized filings—such as foreign income reporting under the Foreign Account Tax Compliance Act or the Net Investment Income Tax—the cost of switching could be higher due to the need for specialized expertise.

Coordinating With the New Preparer

Once you’ve decided to switch, ensuring a smooth transition with your new preparer is just as important as leaving your previous one. The new preparer must familiarize themselves with your financial situation, verify the accuracy of any previously completed work, and ensure compliance with tax laws.

Providing Background Information

Your new tax preparer will need a complete picture of your tax history, including past filings, any correspondence with the IRS or state tax authorities, and details on any pending tax issues. If you’ve been audited in previous years or have unresolved tax debts, disclosing this information upfront helps assess potential risks. If your prior preparer had begun work on your return, sharing any preliminary calculations or draft documents allows the new professional to determine what still needs to be completed.

If you operate a business or have complex tax situations, such as self-employment income, rental properties, or foreign financial accounts, summarizing these elements can help streamline the process. The new preparer may ask for specific documents, such as depreciation schedules for business assets, K-1 forms for partnership income, or Form 8938 for foreign asset reporting. Having these ready prevents delays and ensures accurate reporting.

Clarifying Expectations and Deadlines

Establishing clear expectations with your new tax preparer helps avoid misunderstandings. Discuss deadlines, turnaround times, and communication preferences to ensure a smooth working relationship. If you are switching close to the filing deadline, ask whether an extension will be necessary and what steps you need to take to avoid penalties.

Additionally, clarify any additional services the new preparer offers, such as tax planning, audit representation, or estimated tax payment calculations. If you anticipate needing assistance beyond tax preparation, understanding their expertise in areas like IRS dispute resolution or multi-state tax compliance helps determine whether they are the right fit for your long-term needs. Some tax professionals also provide year-round advisory services, which can be beneficial if you have fluctuating income or complex tax obligations.