Now that we’re into February, the tax season will begin to constantly remind you that it’s here. Already, the commercials have begun, new tax centers are popping up, and soon the sign holders will be gyrating to catch your eye and pointing you to a “tax professional”. With so much competition and commercialization, who is the right person for the job?
Do it yourself software
It’s now rare to see tax returns that are prepared purely manually, on paper, on a version picked up at the post office. Computers, technology, and ingenuity have made this type of filing virtually extinct. This leads us to your first general option for tax preparation: the do it yourself software. The most popular is Turbo Tax, but there are other brands available.
As a tax attorney, I personally like these self-preparation software tools because they have led to business for me in what Internal Revenue Service (IRS) auditors refer to as a “Turbo Tax Audit”. The cliché you pay for what you get (or you don’t get what you didn’t pay for) is applicable for the self-preparation software. The key with the do-it-yourself software is whether you, the tax preparer, know what you’re doing.
The software is generally easy to use, uses question and answer formats, where you answer questions and plug in your data, and voila, your taxes are done. When there is trouble, it’s usually rooted in whether the preparer answered the questions correctly for the purposes of the tax return. Because the computer software doesn’t know you or your situation, this is where you need to have some knowledge of taxes in general to ensure that you’re not taken on a path that will lead you to an appointment with my office, and eventually the IRS.
The next general options are the pop-up-shops. These are your H&R Blocks, Liberty Tax, etc… store fronts that are virtually everywhere. Just because they are everywhere, does not make them better. The quality and expertise of these types of tax preparers rests entirely on who specifically within the pop-up shop prepares your tax return. Because these companies are often so big and/or individually owned and franchised, there really is a spectrum in the quality and experience you may encounter at one of these shops.
On the one hand, you may be trusting your taxes with a seasoned tax professional who’s a licensed accountant, really knows what they are doing, and will work closely with you to ensure your returns are accurate. On the other hand, you may be risking doom with someone using the franchise’s own do it yourself software, who’s answering the (Turbo Tax type) questions for you. So the key when trusting your returns with these types of shops is to ask about the experience and qualifications of the person who is actually going to prepare your tax return.
Trusting your tax preparation with a tax accountant is usually the best way to ensure errors and omissions are not made on your tax returns. The cliché that you pay for what you get is again applicable. However, here, in application, you’re likely paying a bit more because you are usually getting more for your tax preparation buck than you would with the do it yourself software or pop-up shop options.
There are different types of accountants that can label themselves as a tax accountant. The most common type of tax accountants will be either an Enrolled Agent (EA) or a Certified Public Accountant (CPA). An EA is an accountant who is licensed by the IRS while a CPA is licensed by a state’s board of accountancy. Depending on how complicated your taxes are will generally determine the fees. However, in the case of an EA or CPA, they’ll often perform bookkeeping and advisory services year-round which will often ensure no-tax headaches in the future.
Another option is having a tax attorney prepare your taxes. As a tax attorney myself, I think it is generally a bit overprotective to use a tax attorney for merely tax preparation. While there are tax attorneys who prepare tax returns, the tax preparation is often actually done by CPAs or EAs under the umbrella of the tax attorney’s representation, in furtherance of an underlying legal matter for which the tax attorney’s advocacy skills are needed. But, it’s an option nonetheless.
If none of these options fit your budget, the IRS does offer free tax preparation assistance subject to certain qualification guidelines. No matter the method you choose to prepare your tax return, be sure to file your tax return by the April 15, 2014 deadline; or at least file an extension to file by that day.
This article is not intended as legal advice, and cannot be relied upon for any purpose without the services of a qualified professional.