An accountant can prepare your taxes quickly, professionally, and securely, ensuring that you get all the tax credits and deductions to which you're entitled. Perhaps most importantly, they can tackle any unusual or complex tax situations you might face.
Finding an accountant to prepare your taxes is a relatively straightforward process, but ask yourself why you think you need a professional to prepare your return. Here are three common reasons you might choose to do so, along with some tips for finding the right one.
You're Dealing With a Complex Tax Situation
Life isn't stagnant, and it's surprisingly common for taxpayers to experience a wrinkle, crisis, or significant change during the tax year that dramatically affects their tax situations. This is a time for professional help.
You'll want to at least consult with a professional so you understand what you're facing if your situation has changed significantly, even if you don't ultimately ask them to prepare your return.
Accountants often specialize in certain kinds of tax issues. Seek an accountant who has expertise in that area if you have a special circumstance. For example, you might have moved outside the United States, launched a small business, or begun day trading in the stock market.
Call around to various tax offices to find an accountant who specializes in your area of concern if you have a complex tax situation. Ask about their fees, and find out how quickly you can schedule an appointment.
You Want to Save Time
Consider going to H&R Block, Jackson Hewitt, Liberty Tax, or any other retail tax company if having your taxes done quickly and effortlessly is your primary concern. These companies employ specially trained tax preparation experts who will get your return completed as quickly and as seamlessly as possible, and they have locations all over the country.
Keep in mind that preparing your return quickly usually means that the professional isn't going to spend a lot of time meeting with you to determine what tax credits and deductions you might qualify for that you might not be aware of.
Some independent accountants will prepare your taxes for you while you wait, but most will want to conduct at least a brief interview with you first. Then, they'll typically finish your tax return within a few days. Be sure to ask how long it will take the accountant to complete your tax return if time is of the essence, and you decide not to use a retail tax company.
Many retail tax companies also sell software at half the cost in case you don't mind spending a little time at your computer.
You Want to Reduce Your Tax Bill
You might want to seek the advice of a licensed tax professional, such as a certified public accountant (CPA), if your goal is to figure out how to lower your tax bill. This will probably cost you more than a retail tax company would charge, however, so it might end up being a wash financially unless you expect to save big through professional advice.
Check Professional Licenses
Some accountants have earned licenses or certifications in their profession. CPAs are perhaps the most well-known certified accountants. A CPA license is granted when an accountant has met certain educational requirements and has demonstrated comprehensive testing of their tax and accounting knowledge by passing the Uniform CPA Examination.
Experience and education requirements for CPAs can vary somewhat by state.
An enrolled agent (EA) is an accountant who has passed a comprehensive two-day test covering tax law given by the Internal Revenue Service (IRS) or has actually worked for the IRS in a qualifying capacity. Along with CPAs and tax attorneys, these individuals are authorized to practice before the IRS. They can go to an audit or talk to the tax collector on your behalf without you being present.
Not every taxpayer requires the specialized knowledge and skills that these professionals possess, but it’s good to know that they're there in case you need them.
Accountants at local tax firms are often more than helpful and knowledgeable when it comes to simple tax preparation.
Do Some Price Shopping
Don't neglect to ask potential accountants what their fee ranges are, but keep in mind that it's difficult to give an exact estimate just by talking on the phone.
Most accountants charge for each form they have to complete for you, so more complex tax returns naturally cost more than simpler ones. Some accountants are moving to a flat or per-hour rate, however, so it pays to ask.
Inquire about any guarantees that an accountant might offer, as well. Many will personally guarantee that your tax return is free of math errors and data-entry errors. The accountant should offer to redo your tax return free of charge to correct mistakes if any are found.
It's ultimately up to you to make sure your tax return is accurate. You have to sign the tax return yourself.
How Much Will This Cost?
The simple answer is that it varies greatly, based on your tax situation and the professional you hire. For example, a simple, straightforward Form 1040 tax return without deductions could cost as little as $150, whereas a complex filing may be closer to $300 or $400. Some tax preparation professionals charge per filing, whereas others charge by the hour. Your location and the time frame to file your return can also affect the cost.
Don't Overlook the Software Option
This goes back to the original question: Do you really need someone to prepare your tax return?
The days of sharpening several pencils and dragging out a calculator are long behind us. You might want to consider purchasing tax preparation software if you don't mind investing a little time, your tax situation isn't extremely complicated, and you can navigate a website or program fairly well.
Most of these programs, including H&R Block and TurboTax, will walk you through a series of questions. You answer them, and the program will complete your return based on your responses. Do you have a W-2 form? Fine. Just enter the information from the form when prompted. The same goes for any Forms 1099 you've received.
Do you have any qualifying dependents for certain tax credits? Not sure? Just answer a few questions. Tax preparation software will tell you the answer.
These programs usually cost a fraction of what an accountant will charge. State returns are typically extra, but an accountant will usually charge more for state returns, too. Keep in mind, fees can increase across the board during peak filing season.
Finally, the IRS offers the Free File Alliance if your tax situation is very basic, and you earned $73,000 or less during the 2021 tax year. This option won't cost you a dime, but other qualifying rules can apply.
Frequently Asked Questions (FAQs)
What documents will my accountant need to prepare my tax return?
You'll need to provide any W-2s and information about your income from all sources, including interest from investments. If you plan to itemize deductions (or if you're unsure) you should provide receipts or documentation of major expenses, such as for education, medical care, or for your business or home office. Also bring receipts for and charitable deductions you made. These are the basics, and enough to help your tax preparer get started, but your situation may be unique.
How can I save money on an accountant?
When hiring an accountant, make note of whether they charge hourly or a flat fee, and ask for an estimate up front. You may find more affordable rates with smaller practitioners, or through services that offer scaled pricing, based on the complexity of your tax return. Or, if you'd rather skip the accountant and try filing on your own, the IRS backs a number of online sources where you can file for free.
Is online tax prep software safe?
There are frauds and scams to be aware of when it comes to tax prep online, so to be safe you should choose a reputable service on a private internet connection. Major players like TurboTax and H&R Block have security measures in place, and are widely trusted. You can also find sources directly backed by the IRS, such as through the Free File Alliance.