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[H1497]How To Prepare Taxes

by Richard A. Chapo, Ric

Finding someone to prepare your taxes might seem like a large leap. After all, can't you just buy a computer program to do them for you? Yes, you can. If you have a simple tax situation, this is probably a good way to go. If you financial life is a bit more complex, however, a tax preparer is probably a better choice for two reasons. A tax preparer can help you proactively create a plan for reducing your taxes for next year, which can save you a bundle. A tax preparer is also a living being, which means you can call them if the IRS sends you a notice of audit.

So, how do you find someone to whip your tax returns together? Well, word of mouth is probably the best way to go. Ask friends and business associates if they have any suggestions. One or two of them will rave about their preparer. That is the person you want to speak with about your situation.

All that being said, there are some things you want to keep an eye on with preparers. As with any business, some are good and some are not so good. A few warning signs include a tax preparer who is unwilling to sign your return even though they created it, a preparer who offers to receive your refund check on your behalf, a preparer who tries to sell you on some financial scheme that sounds iffy to you. All of these are things that should make you think twice about sticking with a preparer.

When picking a tax preparer, you should really focus on trying to find someone that is proactive instead of reactive. What does this mean? You want someone that will prepare your taxes this year, but also sit down and plan out what steps are going to be taken this year to save you money when filing time comes around next year. Such a tax preparer is worth their weight in gold, so take the time to find one.

Here Are My Receipts

If the thought of preparing your own taxes makes you queasy, don't worry. Preparing your taxes is a job that can be shipped out to others. These individuals, known loosely as tax preparers, prepare tax returns year around. Here's a breakdown of the different types of preparers.

Basic preparers are the least trained, but the cheapest to hire. They tend to be part time workers who are individually employed our work at large out fits like the one with the letters H and R in its name. If you have a simple tax situation, like basic W2 wages and no homeownership, this can be a good choice.

Enrolled agents are a step up from basic preparers. These individuals are licensed by the IRS and must take continuing education courses to maintain their license. That being said, they are not formally educated in the field of finance or tax. Enrolled agents are typically more competent than basic preparers, but much less so than a CPA. If you have a tax situation requiring a basic 1040 filing with one or two schedules, a good enrolled agent should be able to take care of it. If you are looking for more sophisticated tax planning to cut your tax bill, a CPA is probably your best choice.

A CPA [Certified Public Accountant] is a highly trained and licensed individual. Passing the boards to become a CPA is extremely difficult. Once a person becomes a CPA, they also are required to pursue up to 40 hours of continuing education. The downside of using a CPA, of course, is the higher competency translates to higher costs. Still, you get what you pay for, so a CPA may be the answer if you are doing well financially and are looking for guidance on tax planning.

Tax attorneys are a beast unto themselves. If you're bringing in the big bucks, tax attorneys can save you a bundle with sophisticated plans. Tax attorneys are also the people to see if the IRS decides to have a go at you. While CPAs can handle the tax issues raised by the IRS, CPAs tend to know next to nothing about evidentiary law. A good tax attorney will be able to throttle the IRS on legal issues.

So, who should you use to prepare your taxes? It really depends on what you are looking for and your finances. Generally, the more complex your finances, the more competency you should look for. If you have the money, go with a CPA. A good one should be able to save you far more than their fee.

Article Source : How Much Is My Tax Return

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Both Richard A. Chapo & Richard Chapo are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Richard A. Chapo has sinced written about articles on various topics from Finances, Tax Deductions and Tax. Richard A. Chapo is with BusinessTaxRecovery.com - providing information on services.. Richard A. Chapo's top article generates over 22200 views. to your Favourites.

Richard Chapo has sinced written about articles on various topics from Finances, Tax Deductions and IRS Tax. . Richard Chapo's top article generates over 74000 views. to your Favourites.