Are you debating doing your own taxes this year or hiring a professional? If you have trouble calculating your tax return, or even following the convoluted 1040 and other worksheets, then hiring a professional is not a bad idea. In fact, it’s the best way to file taxes.
But in the absence of a regulatory body that can dictate who can and who cannot prepare tax returns, virtually anyone can set up a business and offer their service claiming themselves to be the best, regardless of whether they are trained in tax laws or not. This makes it difficult to separate the good guys from the bad ones.
Best Way To File Taxes: Go Pro
Get Advice From People You Know
The best way to start your search is by asking the people you know – your relatives, friends, colleagues, business associates, financial advisors and attorneys. Some of them are bound to know a good tax accountant who has the expertise and experience you are looking for. Ask them to tell you truthfully about their experience with the tax pro they had hired and ask them what score they would be willing to give him or her out of 10. Get the name of at least three tax accountants and do an online search to find out more about them.
Look For A CPA With Specialization in Tax Accounting
Anyone with rudimentary knowledge of tax laws can claim to be a tax accountant and even get away with it, but if you are looking for the best, then find a Certified Public Accountant (CPA) with a specialization in tax accounting. A CPA is licensed by the state they work in to practice his or her trade after he or she has passed the rigorous CPA exam.
Besides having the training needed to prepare your tax returns, CPAs can also represent you before the IRS for audits and collections. Before hiring one, make sure that he or she has at least a few years experience.
Look for Enrolled Agents (EA)
An Enrolled Agent (EA) is a tax professional who has passed a test covering all aspects of taxation along with a background check administered by the IRS. The 8-hour Special Enrollment Examination covers all aspects of federal tax laws, including those that deal with the taxation of individuals, partnerships and corporations. Before hiring one, ask for his or her Preparer Tax Identification Number (PTIN) as all EAs must have one. EAs can also represent you before the IRS for audits and collections.
[Editors Note: most reputable tax firms now require their agents to become Enrolled Agents. Don’t just assume that if someone has their PTIN, they are an Enrolled Agent. They are separate things. In fact, you can simply pay $60 and get a PTIN without any training.]
Read Reviews And Check With The IRS
Read online reviews about each tax professional on your checklist to find out what their present and former clients think of them. Cross out those with bad reviews. If their other clients are not happy with them, it’s likely that you will not be happy with them either. Also, contact the IRS or your state’s accountancy board to find out if they have been subjected to any disciplinary action.
Subject Them To A Rigorous Interview
Once you have made the final shortlist of tax professionalS that you wish to hire, arrange a meeting with each and ask questions about their education, training, specialization, experience, professional license, affiliations, fees, and whether they will be able to handle your specific tax situation. Also, don’t forget to ask if they perform the work personally or outsource any of it, and how long they will take to complete it.
Do you normally hire a professional to prepare your taxes, or do you do your own taxes?
[Photo Credit: Images Money]
The post Best Way To File Taxes: DIY or Pro? appeared first on MoneySmartGuides.com.