Tax Cat's 8 Tips For Choosing A Tax Preparer
Tax Cat here. It's that time of year again when our thoughts turn from the lovely holiday season to the pile of receipts and other crap that we don't want to deal with — taxes. If you're thinking of hiring someone to prepare your taxes this year — the IRS has some tips that will help you choose a qualified professional.
8 Tips For Choosing A Tax Preparer
- Find out what the service fees are before the return is prepared. Avoid preparers who base their fee on a percentage of the amount of your refund or who claim they can obtain larger refunds than other preparers.
- Only use a tax professional that signs your tax return and provides you with a copy for your records.
- Avoid tax preparers that ask you to sign a blank tax form.
- Choose a tax preparer that will be around to answer questions after the return has been filed.
- Ask questions. Do you know anyone who has used the tax professional? Were they satisfied with the service they received?
- Check to see if the preparer has any questionable history with the Better Business Bureau, the state’s board of accountancy for CPAs or the state’s bar association for attorneys. Find out if the preparer belongs to a professional organization that requires its members to pursue continuing education and also holds them accountable to a code of ethics.
- Determine if the preparer’s credentials meet your needs. Does your state have licensing or registration requirements for paid preparers? Is he or she an Enrolled Agent, Certified Public Accountant, or Attorney? If so, the preparer can represent taxpayers before the IRS on all matters – including audits, collections, and appeals. Other return preparers can represent taxpayers only in audits regarding a return signed as a preparer.
- Before you sign your tax return, review it and ask questions.
If you think your tax preparer is shady, you can write a letter to the IRS or report them using this form (PDF).
Read This Before Choosing a Tax Preparer [IRS]
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Comments:
Yay for tax cat!! I need to get going on getting our paperwork in order so I can make an early appointment with our accountant.
For those that would like professional help without having to pay for it - look into the IRS Volunteer Income Tax Assistance program (VITA). There are sites in your area where a trained volunteer will help you prepare and file your return, and many sites offer speedy e-filing as well. No charge, but only taxpayers making under a certain threshold are eligible. Last year it was in the low 40's, IIRC. Check your local law school, you might find a tax law geek like myself who can prepare your return for free. Call 1-800-829-1040 or check here (new window) for more info.
@teh:
+1000
People can do this on their own. I managed it the year I had to file in 3 different states and figure out how to handle dealing with mortgage interest with someone I'm not married to. It was not a fun year, but at least I saved some money by doing it myself with TurboTax.
I've missed tax cat...
@teh: this is probably true, but there are some problems with this. first is the tried-and-true maxim, "garbage in, garbage out". if you aren't aware of all the activity you're undertaking that has tax implications, you won't always enter it into a software package. i realize that they have an "interview" process in the beginning of the program, but it is sometimes better to be able to discuss things with a real live person, who can ask followup questions that may bring to light issues the software might miss.
also, lots of folks who used software packages last year had their stimulus payments delayed because of the deduction from their refund to offset the cost of preparation. see this article (pops) for more details.
So is H&R Block OK?
I'm smart enough for the software, I suppose, but to be truthful I'd prefer not to have to screw with it.
@teh: hooray for posting my reply in the wrong spot! oh well.
@teh: this is probably true, but there are some problems with this. first is the tried-and-true maxim, "garbage in, garbage out". if you aren't aware of all the activity you're undertaking that has tax implications, you won't always enter it into a software package. i realize that they have an "interview" process in the beginning of the program, but it is sometimes better to be able to discuss things with a real live person, who can ask followup questions that may bring to light issues the software might miss.
also, lots of folks who used software packages last year had their stimulus payments delayed because of the deduction from their refund to offset the cost of preparation. see this article (pops) for more details.
tax cat iz not availavel 4 prepearing ur taxez
tax cat onli consultz
What are Tax Cat's hourly rates? I'm willing to pay in Tender Vittles and Friskies.
You should put some tips up on what 18 year olds need to know about taxes. I have no idea if I need to file taxes, or if my parents still need to do it filing me as a dependent.
This stuff is so confusing.
@Franklin Comes Alive!: Flipside: I filed with TurboTax through FY 2006, and by the last year I was paying about $90 for Federal and State. Last year, when I had to deal with mortgage interest with someone I'm not married to, I just had a tax preparer deal with it for $100.
I'll do it myself if I save $60, but not if I'm only saving $10. I'd rather sit and talk to the tax prep for an hour getting good advice.
@rpm773:
You can get free TurboTax online through various places. State Farm Insurance is where I get mine from.
I think Vanguard offered me free TurboTax online as well, for those who don't have State Farm.
@LoganAdams: H&R Block's software (TaxCut) is ridiculously easy. I've used it 6 years in a row.
I tried TurboTax, but didn't care for it. It missed a bunch of stuff (especially on my state return), so I deleted it and started from scratch with TaxCut. It's far from perfect, but much better than doing it longhand. And unless you're a small company, it's great to learn how everything ties together. I'd highly recommend DIY. Usually they have a guarantee, so if you change your mind, you can get your money back.
@LoganAdams: Last year was my first full year as a freelancer and I went to H&R... This is after a few years of using TurboTax. I could not believe that all this guy did was use the same frickin program that I could of used for 30 bucks on their site. The guys profile when I booked the appointment said he was a 12 year H&R veteran... the guy actually advised me not to even file 12k of my income and said "Well, if they find out, all they will do is send you a bill". I opted to be truthful and just setup a payment program with the IRS. All in all it cost me almost 400 bucks and it was an expensive lesson. for that money (or a little more) I would much rather get a real CPA who I can use throughout the year on other financial matters. If you do still want to use H&R, just use their online program. I sh*t you not its the exact same thing as what they use in person.
@rpm773: I use TaxAct online... It's like $17 for both Federal and State e-Filed (I got an early bird special for $13 this year), and I've been quite happy with the service. I think it doesn't import data automagically from as many places as Turbo Tax, but I can manage to type in the numbers without too many problems. ;)
@Franklin Comes Alive!: Ahh, I see. I was doing TurboTax online, and they nailed me when I filed. I never used the retail program.
I've used TurboTax the last few years and don't have a complaint with the way the program works I DO have an issue with the price increase and the fact that they don't tell you up front how much it'll cost to file online.
I'm considering using Tax Act or the H&R Block software; I don't have a lot of odd things; just a MCC certificate and that should be standard.
@Suttin: Well step one should be asking you parents if they plan on claiming you as a dependent for 2008. They will likely be doing that if you were still in school.
This is important as my sister learned. Filing taxes for the year she graduated college, she claimed herself. So did my parents. My sister got audited as a result.
@Suttin: Basically, you need to file if you have substantial income of any kind or could benefit significantly from various tax credits. I think there is some really low threshold for income below which you don't have to file, but you generally should as you'll probably not pay many taxes anyway and might get a refund if you were overwithheld.
So.... any preferences between Turbotax and TaxCut?
I've been using the www.irs.gov site to find free-filers. lol. I can always find one that will help me do the federal taxes, which are the big money for me. I don't usually bother with State, because it would cost me ~30 to file, and I'd get back about ~35....
@NotChoinski: I have used both in the past, I liked TurboTax better. Unfortunately with a house/kid/investments/whatever, I have to spend the money on a CPA :(
Avoid H&R Block. If you're going to go there, why not just get ready to call the people who can get the IRS to settle for pennies on the dollar.
Try to find someone local who has been there for a while, and see if anyone you know has used them before.
doesnt the irs have free sites to e-file online?
Doesn't the IRS have a program where if you make less than X amount a year you can file your federal return for free?
I know I used it in grad school, but once I got a job I made too much money for the program, grrr...
You should also check out your local senior center. They usually have tax preparers that do all the paperwork for free. You just need to bring all your paperwork - W2's, etc.
Of course, when I went last year I left them a nice tip, but it's sure cheaper than getting them professionally done.
@NotChoinski: I'm Taxcut all the way. See my post above--TurboTax had one shot with me, and I wasted several hours just to have it miss a bunch of stuff. Taxcut did the same return smoothly, all the way through. YMMV depending on complexity of your situation, your state return, etc.
Taxact has been really good for me. Its free if you just file federal like us Tennesseans must do.
@Ash78: My situation; Own 1 home, refinanced twice this year, purchased stock but did not sell it. Also, I'm in a legal same-sex marraige so I'm required to file jointly by state and forbidden to file jointly Federally. (We use a Preparer familiar with this new, uncertain aspect of tax law but from his perspective he's filing three versions of our taxes, and the fees have risen considerably)
Random thoughts...
Avoid - The cat is probably more qualified than Jackson Hewett franchise people.
Avoid - H&R Block is just hard-core upsell now - an IRS audit would be more pleasant than paying them to upsell you financial products while they do your taxes
Avoid - online services where you type in all your intimate personal information and it's stored on someone else's web site.
It should also be noted that you should work with someone that specializes in your profession. There are a lot of different things you can deduct if you work in different fields. If you work in entertainment, you can write off DVD purchases, cable bills, movie tickets, etc etc etc. But you need someone that knows what you can and can't do.
@teh: Hell, most people can do it *without* a software package. Really, it's easy. And there are simple tax tables and worksheets provided.
Secret: Do your own taxes. Unless you have some super complicated tax return --which, I highly doubt. Even if you make a mistake, the IRS will send you a letter and say you either owe more or they will send you a check if you overpaid. If you take the 1040 tax booklet and go line by line, you will find that doing taxes is rather easy.
@Chongo: I'll confirm that - the program they use is more or less the exact same program as TaxCut, with a less dumbed down interface.
@Suttin: Check out the first few pages of the 1040 instructions. You can download them online at irs.gov. One of the first things they address in the instructions is "do I have to file?"
I advise to use H&R only if you have no other option. I spend over 200 bucks there one year and I didn't have anything complicated. I had a mortgage, one full time job and a wife. That's pretty much it. The year after that I used TurboTax and it was easy and only cost something like 30 or so bucks.
@Gokuhouse: H&R is a dangerous rip off. There charge you by the form and file as many as they can, including things that the government doesn't even want or require. I've seen too many people get charged way too much for simple returns and some weren't even done right. Stick with local CPA firms and don't just go to the cheapest. You may pay a little more but at least you can plan your taxes year round instead of relying on seasonal help or boxes.
A nice military perk is that you can have your taxes done free at any on-post tax center. You can also go through militaryonesource.com and they have a link to file your taxes free with H&R Block's online tax filing. I like to use the online service myself - I'm not really a people person.
How about "Do you actually need a tax preparer?" Most people can do just as well (or better) with one of the readily available software packages.