Tax season is fast approaching, and April 15th will be here before we know it. In an effort to help you prepare, I’d like to answer the following question: When can you file taxes on your own and when should you consider hiring a tax professional? Also, what should you look for when hiring a tax professional?
If your situation is straightforward…
For instance, you’re single, without children, don’t own a home, have W-2 income, and you’re comfortable doing your own taxes then go for it! You’ll probably save money and file your own taxes efficiently using online software.
If your situation is more complex…
If you own a house, have investment real estate, own your own business, or have other complexities or simply don’t feel comfortable filing on your own, then consider hiring a tax professional. Also, ask yourself the following: Is your marital status changing? Are children now in the picture? Have you moved to a new state?
Finding a tax professional: how to get started
1. Start by asking for references from friends, family and coworkers. Coworkers can be a particularly helpful resource because they might have similar tax issues as you. For example, if you have an equity compensation package through your employer, this might create tax issues, and it’s helpful to have an accountant who is familiar with them.
2. A professional should ask you the right questions to understand your circumstances as well as interpret the tax code accurately. They should help you understand the nuances of the code as they apply to your situation. A professional can save you time and money as well as give you the peace of mind that you are filing correctly. That said, ultimately you are responsible for the return.
3. The IRS (Internal Revenue Service) provides a number of tips to help you choose a tax preparer. They suggest you never sign a blank return. Additionally, “Before you sign your tax return, review it and ask questions. Make sure you understand everything and are comfortable with the accuracy of the return before you sign it.”
4. Read the fine print. In addition to asking what you’ll be charged and what services will be covered, be wary of “preparers who base their fee on a percentage of your refund or those who claim they can obtain larger refunds than other preparers.”
Additionally, you can search for tax professionals in your area on the following sites: National Association of Enrolled Agents and American Institute of CPAs. Consider seeking the help of a tax professional so that you can file in an accurate, timely manner, and of course, continue to SaveUp!
This post was written by SaveUp’s personal finance contributing writer, Catherine Hawley, CFP®.
Image source: ABC News