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More Tax Prep Tips & Programs

Find the right tax pro or DIY tax software.

By
Laura Adams, MBA,
Episode #106

 

This episode is part two on the topic of tax preparation.

Questions to Ask a Tax Pro

Last week I reviewed the different types of tax professionals that you can employ for help with your tax return. Before you enlist the services of a tax pro, be sure you fully understand how qualified they are to handle your specific needs. Here are eight basic questions you should ask to get to know the company and your preparer’s level of experience:

  1. How long have you or your firm prepared tax returns for clients?

  2. Who would actually be preparing my tax return?

  3. What licenses and experience would my tax preparer have?

  4. How do you charge for your services?

  5. Do you specialize in any certain tax issues?

  6. When could I expect to have my tax return completed?

  7. What’s your policy for doing return amendments if changes or corrections are needed in the future?

  8. How do you help me if I’m questioned or audited by the IRS?

If a tax preparer won’t sufficiently answer your questions, keep searching for one that makes you feel comfortable. The best tax professionals should also ask you questions to determine if you’re qualified for specific deductions and available tax credits to lower your tax bill.

Proceed with Caution

A red flag to watch out for is a firm or individual who wants to charge you based on how much refund you’ll receive. The fee you pay for professional tax help usually depends on the complexity of your return. Some professionals charge by the number of tax forms you require, some charge by the hour, and some bill a flat fee.

A couple more warning signs to note are being asked to sign a blank tax return form or a recommendation that your tax refund be sent somewhere else besides directly to your bank account.

Do a Background Check

After your interview with a potential tax professional, you can do a background check to verify their licensing status and uncover any disciplinary action taken against them. Your state’s board of accountancy will provide information about CPAs. The IRS list of disciplinary actions reveals suspensions, disbarments, and censure taken against CPAs, enrolled agents, and attorneys. And the American Bar Association offers a directory of lawyer disciplinary agencies by state.

DIY Tax Software

If you want to prepare your own tax return, the most recommended tax programs are TurboTax® and TaxCut®. TurboTax® is offered by Intuit, the company that created Quicken and QuickBooks—two of the most popular bookkeeping systems for individuals and small businesses. If you use Quicken or QuickBooks you can easily import your financial data into TurboTax®. And TaxCut® is offered by H&R Block, the well-known tax and financial services provider that’s been around since 1955.

Both companies offer a variety of tax preparation programs suited to the complexity of your situation. Some focus on maximizing deductions, others give special guidance for financial investments, rental properties, or self-employment income, for example. Some programs include consultations, a final review by a tax professional, or even an accuracy guarantee.

You can begin online programs with either TurboTax® or TaxCut® for free. Then you pay at the time you file your return electronically. Online programs range in price from $15 to $100. Both companies also sell downloadable desktop software that ranges in price from $20 to $100.

Making Tax Payment

Most tax professionals and tax programs offer integrated e-file and e-pay options. Making your tax payment electronically is convenient, safe, and free. You can authorize a funds withdrawal or pay with a credit or debit card. And if you’ll be receiving a refund here’s a tip: you can have those funds paid directly to your existing IRA, or to a new one, using IRS form 8888 (for more on what to do with your tax refund, see this episode).

Do a Thorough Return Review

I recommend getting an early start on your taxes so you can eliminate any last-minute panic or having to file for an extension. Now’s the time to start gathering your information and to determine who’s going to do your taxes. Whether you or a tax professional complete your return, always make sure that your name and social security number are correct. Don’t hesitate to ask questions about entries you don’t understand. And remember that when you sign or submit your return, you are responsible for the accuracy of the information. This is the law—even when the return is prepared by someone else or with the help of an electronic program.

Administrative

I’m glad you’re listening. You’ll find a transcript of this show as well as my contact information at moneygirl.quickanddirtytips.com

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