Working With a Tax Professional

October 12th, 2018

Stressful, time consuming, confusing…what’s not to love about paying taxes? If you’re looking for some hands-on help, working with a qualified tax professional can probably make your life easier, and without breaking the bank. But there are some things you should think about first.
 

Do you actually need help with your taxes?

While preparing your taxes can seem intimidating, you absolutely can do it yourself if you’re up for it. The most basic (and least expensive) way to do it is to fill out IRS forms by hand. The IRS website includes step-by-step instructions and also has plenty of other useful information about filing your taxes in general. The upside to this approach – it’s free and will give you the best understanding of how your taxes are calculated. The downside – it can be time consuming.
 
So if you want to save some time with automated assistance, you can consider using tax preparation software, like TurboTax, for a relatively small fee. You probably won’t need to pay more than $100 a year, although prices will vary based on how complicated your taxes are. For the most basic returns, you can even get software for free.
 
But if you’re having trouble doing your own taxes or are just worried about making a mistake, then it might be time to find a tax professional to lend a helping hand.
 

Types of tax professionals

There’s a range of tax professionals out there, and technically speaking, they don’t need any particular certification to help you with your taxes. However, they do need to be a Federally Authorized Tax Practitioner (FATP) if they’re going to represent you before the IRS, say if you’re faced with an audit. And in general, it’s a good idea to work with someone with recognized credentials. For the most part, FATPs full into one of three categories; CPA, enrolled agent, or tax attorney.
 

CPA

A CPA, or Certified Public Accountant, must pass a challenging accounting exam, meet work experience and education requirements, and be licensed by the state he/she works in. If your taxes are fairly complicated, then it might be a good idea to work with a CPA. CPAs also cover a wider range of accounting matters beyond just taxes.
 

Enrolled Agent

While CPAs are trained to deal with a range of accounting topics, enrolled agents are trained specifically to handle tax matters. The requirements to become one are less stringent than those for a CPA, but it’s still a rigorous process – they either need to pass a series of exams or qualify based on experience as a former IRS employee. Enrolled agents are licensed by the federal government, while CPAs are licensed at the state level.
 

Tax Attorney

A tax attorney is a lawyer who specializes in tax law. They’re typically used for more complicated tax issues, like estate planning, tax violations, and small business financing.
 

Most likely, a CPA or enrolled agent will be well qualified to help you with your tax return and at a reasonable price. For really simple returns, you may even pay less than $100. For more complicated returns, you might end up paying a few hundred dollars.
 

Ask around

Before you choose someone, you’ll want to shop around and talk to a few professionals. Ask friends and family for recommendations, search online or stop by a branch of H&R Block, a national tax preparer that offers software options as well as brick and mortar locations. There are probably local professionals in your area too, so check them out.
 
Be sure your tax professional can handle any specific needs your have or unique circumstances you’re dealing with. In addition to asking how much they charge, don’t be afraid to ask questions about their experience and qualifications. Some questions to consider;
 
-How long have they been working as a tax professional
 
-What kind of licensing and certifications do they have
 
-Do they specialize in particular tax issues
 
-Do they outsource the work or do they do it themselves
 
-Will they share your information with third parties
 
Make sure they person answers all of your questions honestly and openly. Remember, you’ll be trusting this person with filing your tax return.
 

Background Checks

It’s also a good idea to run a quick background check before signing on with a professional. You can verify the status of an enrolled agent directly with the IRS.
 
To check on a CPA, you can contact your state’s accountancy board and confirm the individual is licensed and find out if any disciplinary actions have been taken in the past.
 
Taking a minute to check now could save you a lot of trouble down the road.
 

Summary

We think it’s important for everyone to understand the basics of how taxes work, and most people can handle their own taxes, but there are some reasons why you might want to work with a professional. Doing so probably won’t cost much and can save you some time and piece of mind.

 

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