It may be summertime, but doesn’t it feel like the income tax filing deadline is always just around the corner? Complicating matters is the fact that there are many tax prep expert options available to us.
When choosing the right professional to handle your tax preparation, the most important factor is not the talent but the location. Depending on where you are, you definitely want someone who works close by, preferably in the same city as you. It’s merely because city, county, and state lines undeniably matter when making sure you’re not only paying your taxes correctly but getting the right deductions and developing the right long term tax strategy.
Chain: The Cheap and Probably Acceptable Choice
Tax preparation services are the simple choice if your tax preparation needs aren’t complex. The people working at these places might not be the class of tax pros you want, but they know the local tax codes. And they also will not hold back any obvious and important tax information. They can have a tendency to skip over a personalized assessment of your tax circumstances and miss buried deductions due to their commission-based minimum wage pay.
Enrolled Agent: Top Notch and Sometime Top Dollar
An enrolled agent is typically someone who either worked for the Internal Revenue Service (IRS) in the past or passed the IRS certification examination. They will more likely than not be experts of federal level tax information but could be less knowledgeable about the ins and outs of your local tax law. Because they have a federal license and direct experience with the IRS, expect higher fees for their experience. But don’t forget that the IRS is humorless and so those who’ve worked for them probably are too.
Certified Public Accountant: The All-Arounder
CPAs are accountants who have successfully passed the state accounting exam. Whether or not they are talented tax preparers is a matter of individual skill, but on the whole CPAs are the best bet when devising a tax strategy. You might even get lucky and find one that can help you do basic internet stock research based on your projected financial future when taxes are factored into your potential investments. This is especially true if a recent event like a divorce or death of a loved one has caused an unfortunate radical change in your financial world; someone with a general grasp of finance can help with many of the associated facets involved.
Not all CPAs are tax experts, but many of them are, and all it takes is a little research to find one that is both fairly priced and has the know-how to help you plan your taxable years ahead.
Tax Attorney: The Ferrari of Tax Preparers
When it comes to tax prep expert options, the truth is, the more complicated your tax requirements, the more likely you’re going to need an attorney who specializes in tax law. True, you’ll be spending a lot more. However, with that added cost comes assurance in discussing even the most dubious of tax law and loopholes with someone who is an expert on those sorts of things. Tax lawyers are best for people with six- and seven-figure incomes who need someone who not only knows tax law, but the penalties for breaking those laws.
Picking the right tax expert depends upon which option is the most sensible for your situation and which is a waste of money. If you spend enough time looking you’ll find the correct tax preparer. Odds are they’re right around the corner.
Photo Credit: JD Hancock
Some taxpayers, such as those with a total income of less than $49,000, the elderly, military personnel and those with special needs, may be able to skip the traditional tax preparation service. Instead, they could schedule an appointment with an IRS office to have the return prepared by volunteers at no charge. There are certain qualifying restrictions. The IRS website offers more details about this program.
Yep, I agree. In those cases, a CPA is invaluable.
As a truck driver I double my refund by using a CPA who is experienced in handling my occupations special factors. I suggest trying a CPA once and see what they can tell you or change. It is actually cheaper for me than going to Block et al.
Keep in mind that a tax preparer of any type is not likely a tax planner. A tax preparer optimizes for current taxes, a tax planner optimizes for lower lifetime taxes. It may make sense to pay more tax this year to save more later. Consider at least consulting with a tax planning specialist (or asking your preparer if they are considering more than just the current tax year) on a regular basis.