Personal Finance By Maurie Backman 938 Views

4 Tips for Choosing a Tax Preparer This Year

Even if you've managed to file your own taxes before, there are several benefits to hiring a tax preparer to do the job for you. First, there's the peace-of-mind factor. A professional who does taxes for a living is more likely to catch a mistake on your return or avoid one in the first place, thereby lowering your risk of an audit. Furthermore, a tax preparer might unearth different strategies that save you money on your taxes -- strategies you wouldn't have known to use yourself.

That said, not all tax preparers are created equal. Here are a few tips for choosing the right one.

1. Check for the right qualifications

Tax preparers have varying levels of training and skills, so if you're going to hire one, you might as well get your money's worth. While a non-CPA accountant might technically be qualified to prepare your return, it often pays to hire an actual CPA or an enrolled agent (a federally licensed tax practitioner). Both CPAs and enrolled agents are authorized to represent clients in IRS matters, so if the need arises, that's some nice protection to have.

2. Figure out what your fees will entail

Clearly, the drawback of hiring a tax preparer is having to pay for that service, but if you do your research, you might keep that cost manageable. The amount you're charged will generally depend on how complicated your tax situation is and how many unique tax forms the professional you hire will need to prepare.

There are a few different fee models you might be presented with when choosing a tax preparer. The first and most desirable is a flat fee. In this situation, your tax preparer will usually give you an estimate for their services during a quick consultation. Other tax preparers, meanwhile, charge an hourly rate, which is less ideal since you won't necessarily be able to nail down your total costs before you sign an agreement.

Finally, there's the percentage-of-refund arrangement, which is probably the most dangerous of the lot. In that scenario, your tax preparer's fee is calculated based on what your refund comes to, which means that they might get overly aggressive with deductions -- to the point where your audit risk skyrockets -- in an effort to score the highest possible payout.

To give you a sense of what you might pay to have your taxes done, according to the National Society of Accountants' 2016-2017 fee survey, the average cost to prepare a simple Form 1040 was $176. Meanwhile, the cost for a 1040 plus Schedule A (for itemized deductions) was $273. You might end up getting charged a higher or lower flat fee depending on where you live and what your taxes look like, but having these numbers in the back of your mind might help you avoid overpaying.

3. Find out whether you'll get audit support

You can be as honest with the IRS as possible and have the most meticulous tax preparer in the world, and sometimes, your return might get flagged for an audit nonetheless. Since that possibility always exists, one thing you should be sure to inquire about is whether the tax preparer you hire will provide audit support in the event you need it. As mentioned earlier, not all tax preparers are authorized to represent clients in IRS matters, so it pays to find someone who is.

4. Ask about availability

Tax preparers tend to be pretty busy during tax season. Throw in the fact that many are still getting used to last year's tax changes, and you might be hard-pressed to find someone who can hammer out your return on a whim. You have until April 15 to file your return this year, so if you find a tax preparer who can work with you, say, during the last week of March, that gives you a decent window to complete your taxes before the deadline.

On the other hand, be wary about working with a tax preparer who can't squeeze you in until the second week of April. That's cutting it too close for comfort, and it's stress you don't need -- especially when you're paying for the service of getting your taxes done.

There are plenty of good reasons to hire a tax preparer this year, but if you're planning to go that route, don't wait. Tax season is already well underway, and the last thing you want to do is procrastinate and then struggle to find a decent professional to help you.

The $16,728 Social Security bonus most retirees completely overlook

If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $16,728 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after.



Comments

There are 0 comments on this post

Leave A Comment