Preparing an income-tax return is something to look forward to if you expect to get a refund. But even if you're getting money and have...
Preparing an income-tax return is something to look forward to if you expect to get a refund.
But even if you’re getting money and have a simple return, the prospect of doing your own can be daunting.
“Taxes are very intimidating. Lots of intelligent people don’t try to do it themselves,” said Alfred Stacey, who heads the tax-service section at Bourgeois Bennett accounting firm in Metairie, La.
But before you hire someone else for the job, be sure to get the right tax preparer.
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You should check out the person before handing over loads of personal information such as your Social Security number, bank-account numbers and income sources.
Remember, no matter who prepares the return, you are responsible if there are any mistakes. So you must find a professional who won’t try to get too creative and will stick to doing what’s right.
Only three groups of people can represent you in the event the Internal Revenue Service disputes some aspect of your return. They are tax lawyers, certified public accountants (CPAs) and enrolled agents.
Lawyers and CPAs carry a certain level of automatic credibility.
Both types of professionals have passed strenuous exams, answer to state licensing boards and must regularly meet continuing-education requirements to be allowed to practice.
But they don’t necessarily specialize in taxes, and you need someone who does.
Enrolled agents are tax professionals who are licensed by the federal government and can prepare tax returns, as well as answer questions about federal and state tax laws. They can represent taxpayers in disputes with the IRS — that’s where the agent part in the title comes from.
Enrolled agents have made the extra effort to pass a rigorous exam similar to one required for CPAs.
A list of enrolled agents is available on the Web site set up by the National Association of Tax Professionals at www.taxprofessionals.com. There you may enter your ZIP code, designate a certain radius and generate a list of members in your area.
Ask how long the person has been working in the tax business and whether the person is a member of any professional groups. Even among CPAs you can shop around.
The cost difference between one firm and another could be related to the size of the firm.
Some accounting firms offer more services such as auditing and consulting services than large or midsize businesses need. Other small CPA firms have fees geared to small businesses and individuals.
Heavily advertised national tax services are out there at this time of year. But you should ask yourself whether they’ll be there for you if the IRS comes calling.
Such services usually put employees through some measure of training. But you should ask yourself whether you can handle the job as well as the people working inside.
If you decide to prepare your own tax return, consider using the tax software on the market, Stacey said. It will walk you through each step and ask questions along the way. But the outcome is still only as good as the data you put into it, he said.