Finding an accountant to prepare your taxes is a relatively straightforward process, but ask yourself why you think you need a professional to prepare your return. Here are three common reasons you might choose to use one, along with some tips for finding the right one.
You’re Dealing With a Complex Tax Situation
Life isn’t stagnant, and it’s surprisingly common for taxpayers to experience a wrinkle, crisis, or significant change during the tax year that dramatically affects their tax situations. This is a time for professional help. Accountants often specialize in certain kinds of tax issues. Seek an accountant who has expertise in that area if you have a special circumstance. For example, you might have moved outside the United States, launched a small business, or begun day trading in the stock market. Call around to various tax offices to find an accountant who specializes in your area of concern if you have a complex tax situation. Ask about their fees, and find out how quickly you can schedule an appointment.
You Want to Save Time
Consider going to H&R Block, Jackson Hewitt, Liberty Tax, or any other retail tax company if having your taxes done quickly and effortlessly is your primary concern. These companies employ specially trained tax preparation experts who will get your return completed as quickly and as seamlessly as possible, and they have locations all over the country. Some independent accountants will prepare your taxes for you while you wait, but most will want to conduct at least a brief interview with you first. Then, they’ll typically finish your tax return within a few days. Be sure to ask how long it will take the accountant to complete your tax return if time is of the essence, and you decide not to use a retail tax company.
You Want to Reduce Your Tax Bill
You might want to seek the advice of a licensed tax professional, such as a certified public accountant (CPA), if your goal is to figure out how to lower your tax bill. This will probably cost you more than a retail tax company would charge, however, so it might end up being a wash financially unless you expect to save big through professional advice.
Check Professional Licenses
Some accountants have earned licenses or certifications in their profession. CPAs are perhaps the most well-known certified accountants. A CPA license is granted when an accountant has met certain educational requirements and has demonstrated comprehensive testing of their tax and accounting knowledge by passing the Uniform CPA Examination. An enrolled agent (EA) is an accountant who has passed a comprehensive test covering tax law given by the Internal Revenue Service (IRS) or has actually worked for the IRS in a qualifying capacity. Along with CPAs and tax attorneys, these individuals are authorized to practice before the IRS. They can go to an audit or talk to the tax collector on your behalf without you being present. Not every taxpayer requires the specialized knowledge and skills that these professionals possess, but it’s good to know that they’re there in case you need them.
Do Some Price Shopping
Don’t neglect to ask potential accountants what their fee ranges are, but keep in mind that it’s difficult to give an exact estimate just by talking on the phone. Inquire about any guarantees that an accountant might offer, as well. Many will personally guarantee that your tax return will be free of math errors and data-entry errors. The accountant should offer to redo your tax return free of charge to correct mistakes if any are found. It’s ultimately up to you to make sure your tax return is accurate. You’ll have to sign the tax return yourself.
How Much Will This Cost?
The simple answer is that it varies greatly, based on your tax situation and the professional you hire. Tax professionals charge an average of $220 for a Form 1040 with a state return and no itemized deductions, according to a report from the National Society of Accountants. For those who itemize their deductions, that number goes up to $323. Some tax preparation professionals charge per filing, whereas others charge by the hour. Your location and the time frame to file your return can also affect the cost. Plan on spending more if you want to itemize your deductions, because this involves a good bit more work. You’ll pay still more if you’re self-employed and must file a Schedule C.
Don’t Overlook the Software Option
This goes back to the original question: Do you really need someone to prepare your tax return? The days of sharpening several pencils and dragging out a calculator are long behind us. You might want to consider purchasing tax preparation software if you don’t mind investing a little time, if your tax situation isn’t extremely complicated, and if you can navigate a website or software program fairly well. Most of these programs, including H&R Block and TurboTax, will walk you through a series of questions. You answer them, and the program completes your return based on your responses. Do you have a W-2 form? If so, just enter the information from the form when prompted. The same goes for any Forms 1099 you’ve received. These programs usually cost a fraction of what an accountant will charge. State returns are typically extra, but an accountant will usually charge more for state returns, too. Keep in mind that fees can increase across the board during peak filing season. Finally, the IRS offers the Free File Alliance if your tax situation is very basic, and you earned $73,000 or less during the 2021 tax year. This option won’t cost you a dime, but other qualifying rules can apply.
