Did you know that the IRS does not currently have any guidelines for who can prepare your tax returns? That can make it a challenge for the 56% of American taxpayers who hire someone to prepare their income taxes. How can you know you’re getting the expertise you’re paying for?
Between the months of January and April, you’ll be surrounded by advertisements for numerous big-name tax preparation chains telling you how fast and easy it is to work with them and that they can get you your biggest possible refund. Seems easy enough? Not if you’re looking for expert tax advice.
Although you can find highly trained tax experts who work at these chains, a majority of these tax preparers are seasonal workers who get trained a few weeks of training prior to the start of tax season. Many just enter your data into forms, which you could easily do it yourself with tax software. Why have someone else do it?
Although this may seem like a simple task, this can often go wrong. In a Government Accountability Office study, staff were posing as real taxpayers and worked with different tax prep chains to gauge their accuracy. In all of the visits made, tax preparers made errors. Some would have cost the taxpayers almost $2,000 and others led to getting too much of a refund. Either way, if there were for real taxpayer’s returns, many would have been subject to penalties for negligence and willful or reckless disregard of tax rules.
The Better Options
It sounds like having your taxes done at a tax preparation chain can be cost efficient now but you’ll end up paying more later. There are better choices available for you that will can save you money in the long run.
Enrolled Agent – An enrolled agent is a tax specialist for people looking for professional tax return preparation and tax advice. They are licensed by the IRS to represent their clients in case they’re audited and must pass a suitability check in addition to a three-part special enrollment examination. This exam covers individual and business tax laws as well as representation issues. Enrolled Agents are also required to also complete 72 hours of continuing education every three years in order to maintain their licenses.
Certified Public Accountant – A CPA also undergoes extensive training and testing as an enrolled agent. CPA’s are licensed by their states and must pass the Uniform CPA Examination. They must also meet ethical and continuing education requirements as well. They can offer a range of services and many specialist in tax preparation and planning. If you have a complicated tax return, your CPA can help by providing advice on various tax strategies to take or avoid based on your circumstances.