With the changes to the tax code over the last couple of years, it is probably a good idea to do a little research before filing your tax return this year. What may have been deductible last year, may not be this year and vice versa. You can be missing out on a deduction or credit that was not available in prior years or may have thought you could take a deduction that is no longer permissible.
Face it, no one wants to pay more taxes than they already have. In fact, we want to make sure we got every penny owed to us in our tax refunds. The question is can we do that on our own.
Hiring a professional does come along with a cost, but it may be worth the investment. While you are still required to gather information and tax documents provided by your employer and financial institutions, there is not really much more time to invest in the process, nor are there any unmissed opportunities.
The question you may want to ask is do you really need an EA (Enrolled Agent) or can a tax preparer provide adequate support for your tax filing. Tax preparers MAY OR MAY NOT BE trained and certified to file income tax returns.
An enrolled agent is a person who has earned the privilege of representing taxpayers before the Internal Revenue Service by either passing a three-part comprehensive IRS test covering individual and business tax returns, or through experience as a former IRS employee.
If your financial situation is fairly straight forward (i.e. you have a single income stream with minimal investments) filing your own return may be the answer. However, you will have to find an e-filing solution, as that is the only way federal and state agencies will accept your tax filing. Once you’ve gathered all the necessary paperwork, including W-2s, 1099s and other financial documents and receipts, it will take you anywhere from an hour to a few hours to e-file your return.
Most tax software programs make it easy to enter fields of information and will make calculations automatically, saving you the hassle of doing the math yourself. The programs will also flag errors so you can double-check the information you’ve entered. Some of the software programs also offer customer support who can answer questions and guide you through the process.
Programs like TurboTax, TaxSlayer and TaxAct claim to provide free filing services, however, once you start the filing process, that is subject to change. If you work in one state but live in another, if you have income from multiple sources, if you are self-employed or if you need support, the free service suddenly comes with a cost. The time and effort put into the “free” filing could have all been a waste of time.
If you decide to use a tax professional, ask for recommendations from friends and colleagues. All legitimate tax preparers are required to have a Preparer Tax Identification Number (PTIN) from the IRS, which can be verified on the IRS website. Consider using a tax professional that has an EA (Enrolled Agent) designation.
Confirm that your tax preparer will be signing your tax return and has filled in their PTIN, as this is required. If they don’t sign your return or “forget” to sign your return, it may be a sign that your preparer is not legitimate.
When using a new tax preparer, they should ask questions about your financial situation, review your prior year’s tax return and should let you know if he or she will be filing your return by the filing deadline, or require you to file an extension. Filing an extension is not necessarily a bad thing but should be done in a timely manner and should include any payments that may be due to the federal, state and city agencies to avoid future penalties and interest.
If you have never used a tax professional before, have them review your last few tax returns. A tax return can be amended and refiled if there was a missed deductions and/or credits from prior years returns, adding an additional benefit to using a pro.
If you are unsure about whether to file your tax return on your own or hire a professional, it may be a good idea to start early. You may be able to consult with a professional tax preparer before they get too busy to see if it makes sense to file on your own or use their services.
Anthony Mauriello, E.A. My Tax Fella – Mauriello Enterprises, Inc.
(718) 356-5178 www.mytaxfella.com