The countdown to filing day is on. With just a few short weeks until the April filing deadline (April 15th in the U.S.; April 30th in Canada), now’s the time when most individuals start looking at their shoebox full of receipts with disdain.
Not surprisingly, now is also about the time when people start weighing the pros and cons of simply hiring someone to handle their filing frustrations.
According to the Canada Revenue Agency, nearly half of the 28 million tax returns that were filed in 2013 were done using the CRA’s EFILE, a system that tax preparers use to file electronically on behalf of their clients. The same trend is happening south of the border; according to MSN Money, 90 percent of Americans have professionals do their tax returns or rely on computer tax programs for assistance. But is this professional tax prep really necessary, or is hiring someone to handle your return an unnecessary expense?
Well, that depends.
Before you walk into a tax preparer’s office, it’s crucial that you know what kind of services you’re looking for. Are you hoping to find someone strictly to file your return or are you seeking professional advice? What’s more, are you prepared to pay someone for their assistance?
If you’re one of the millions of people thinking about working with a tax professional, here’s a little advice to help ensure you pick the right person to handle your return.
How to pick the right person to file your return
- Preparer vs. planner
A tax preparer does not offer the same services as a tax planner, bookkeeper or accountant. Before you decide to seek out assistance with your return, decide if you need someone to fill out your tax return or if you want someone to provide you with advanced tax planning. There are basically four categories of tax professionals standing by to help with your return: storefront agents, certified public accountants (CPAs), enrolled agents and lawyers. If you’re looking for solid tax advice, find a professional who specializes in taxation and makes it a priority to keep up with tax trends and changes in tax law.
- Understand your tax situation
As tempting as it is to have a professional handle your taxes, it may be an expense you don’t need to take on at this time. If you’re good with numbers, manage to keep organized records, and have a relatively simple tax situation, you might not need the extra hassle or expense. Individuals who have a single job, no investments and no dependents can likely handle their tax return on their own (provided they take a little time to brush up on basic tax law and filing rules). If you’re still hesitant about filing by yourself, the IRS offers a free efiling system that makes it easier to navigate the process without professional help. In Canada, the Canada Revenue Agency offers a Community Volunteer Income Tax Program that provides assistance to individuals with simple tax scenarios. To be eligible, a single person’s income must not exceed $30,000; a couple’s income must not be more than $40,000; and an adult with one child can’t have income higher than $35,000.
- Are you prepared to pay?
Having someone help out with your taxes can cost anywhere from $50 to $500, depending on the services that you request and your employment status. That being said, that’s money well spent if it helps yousecure a greater refund on yourreturn. What’s more, any fee you pay may be deductible on your next year’s return. Depending where you’re located, tax preparation fees can qualify as miscellaneous deductions.
- Know what questions to ask
If this is the first time you’ll be working with a tax professional, call and make a preliminary appointment before hiring them to handle your paperwork. A quick conversation will help you better understand what documentation will be necessary and whether or not your chosen tax professional will be able to offer you the right kind of advice. If you’ve filed with a professional in the past, take the time to review the line items listed on a prior return. This will help you get organized for this year’s process. It also doesn’t hurt to bring in your prior year’s return and show it to your tax planner. This will help him or her get better acquainted with your financial situation if you’re working with them for the first time.
- Make note of major changes
Most people’s taxes don’t change dramatically from year to year unless their life has changed dramatically. A marriage, death, birth, new business venture or major investment will definitely impact your return; as such, it’s probably worth seeking a professional’s opinion.
Get it right from the beginning
In the end, it’s your return and your responsibility to round up all of the right paperwork. Regardless of who does the work, you ultimately accept responsibility for your submission the minute you sign it. If you’re going to work with a planner or preparer, make sure you trust their opinions.
After all… if there’s one person you don’t want to rub the wrong way, it’s the taxman.
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