Money Girl has some tips for getting the most from your taxes
Several of you have e-mailed me asking whether you should prepare your tax returns yourself or hire a tax professional. The answer depends on your own tax situation and your personal preference.
When Should You Do Your Own Taxes?
Here are a few suggestions: If your tax situation is straightforward and you’re comfortable doing so, you might choose to prepare your taxes yourself. Programs such as TurboTax come in very handy and work well, even for more complicated returns in most cases. Tax prep programs guide you through filling out your returns in an interview style where you simply answer the questions you’re asked. The programs also allow you to enter your information directly into tax forms.
The IRS website has answers to frequently asked tax questions. You can also call the IRS toll free at 1-800-829-1040 for help with your tax questions.
When to Get Help On Your Taxes
If your tax situation is complicated, or you have a lot of questions or need specialized advice, it can make sense to hire an experienced and knowledgeable tax professional. For example, if you own your own business, have rental properties, or had a major change in your financial life in 2006, the advice and know-how of a professional can potentially save you time, headaches, and money.
Two other good reasons to hire a professional are (1) if you don’t have time to do your own taxes, or (2) if the last thing you’d ever want to do is fill out those forms yourself!
Even if you prepare your returns yourself, it’s still possible to hire a professional for a consultation. You might want to do this if you’re comfortable preparing your own returns, but want specific advice or to strategize about optimizing next year’s taxes.
What to Look for in a Tax Professional
Keep in mind that the expertise and skill level of tax professionals varies greatly. If your return is simple, an experienced tax preparer can get the job done efficiently. For more complex returns, a CPA or Enrolled Agent may be your best bet. Certified Public Accountants are licensed by the state and Enrolled Agents are licensed by the federal government.
Referrals can be a great way to find a capable tax pro. Ask friends, family members, or colleagues whose opinion you value for their recommendations. And if your tax situation calls for a professional with specialized knowledge, ask people who have a tax situation similar to yours for a referral.
If you do decide to use a pro, you’ll want to meet with them as soon as possible, especially if you’re expecting a refund and don’t want to file an extension.