9 Easy Ways to Hire a Tax Preparer

Tax season is here. Some people procrastinate and wait until the last minute to file their taxes which makes it difficult when trying to find a reputable tax preparer. It can take time to find a good tax preparer but if you wait until the last minute you have limited options and may be charged a higher fee. The average cost ranges from $150 to $300 but can range as high as 1,500.

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Some tax preparers charge by the hour, charge a flat fee for each form used, charge a fee based on the previous year’s fee plus additional charges for any changes, charge based on the complexity of the client’s situation, charge a flat fee for each data entry item and some charge based on a percentage of your refund. Here are 9 steps to hire a tax preparer:

Expertise

When hiring a company verify who will prepare your taxes - an entry level, junior or senior employee. Ask about their experience and the type of clients they have serviced.  If a less seasoned employee is preparing your taxes request that a senior employee review your returns before filing to ensure no deductions were missed and no errors are found. Not everyone is knowledgeable in every area and not everyone will admit that they lack that knowledge because they want to get your business.

Claims

Avoid hiring tax preparers who guarantee a refund or a specific amount, this information cannot be determined until your taxes are prepared. These types of individuals or companies conduct unethical or illegal practices to get large refunds, may charge additional fees and put taxpayers at risk for an audit.

Disclosure of Fees

Ask for disclosure of all fees that can be charged. Inquire about payment methods and installment plans.

Registration

Verify the tax preparer is registered in their state and possesses a Preparer Tax Identification Number (PTIN).  Tax preparers can have different credentials. You have the option of using a Certified Public Accountant (CPA), Enrolled Agent (EA) or Tax Attorney.

Known Companies

Companies can be used such as H&R Block or Jackson Hewitt to prepare taxes. However, these companies may not have tax preparers who specialize in certain areas. These types of companies are best for taxpayers who have common tax deductions, homeowners and those who do not own a business.

Customer Service

Verify their level of customer service by looking up the individual or company on the Better Business Bureau (BBB) website or with your state directory for licensed tax preparers.

File Electronically

Ask if the tax preparer offers electronic filing which spends up processing time and the time to receive a refund.

Obtain Contact Information

Ensure you have the tax preparer’s contact information including first and last name, work and cell phone number and email address if you have questions during or after the tax preparation process.

Guarantee

The tax preparer should guarantee the accuracy of your tax returns and offer to amend your tax return at no cost if an error is made or be willing to represent you during an audit.

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Don't Fall for Tax Preparation Gimmicks

                                                         

According to FranchiseHelp Holdings there are approximately 38,287 tax preparations companies in the U.S. Approximately 144 million taxpayers filed tax returns last year. For several decades large chain tax preparation companies have preyed on low-income neighborhoods, inner-city and rural areas opening offices across the country. These taxpayers were lured into their offices promising to receive quick refunds in exchange for a fee knowing that most of these taxpayers were desperate for money and would jump at the opportunity even though it was a bad choice.

Offices are specifically located in areas where incomes are less than $50,000 or in areas where there are several check cashing stores and liquor stores. These tax preparation companies also lure these taxpayers into their offices with free coffee, snacks, and flat screen televisions in the waiting areas all to get repeat business and increase their profits.

In some instances customers are lied to and confused by the services offered and don’t realize that if they file their taxes online or through a free tax preparation center they can get their refund back in the same time period. These large chain companies are stealing money from low-income taxpayers who need their money the most.

The federal government stopped these large chain tax preparation companies from offering the refund anticipation loan or rapid refund. However, these tax preparation chains found a loophole around. H&R Block now offers taxpayers the gimmick to put your refund on an “Emerald Card” for a $45 fee or to you can get a “paystub loan” where taxpayers get a partial advance on their tax refund in December of January before the taxpayer receives their W-2. The interest charged on this paystub advance is 25% in addition to the fee charged to prepare their taxes.

H&R Block also has a “Second Look” gimmick where they offer to look over your taxes to find errors. When you file taxes the IRS will catch the errors and fix them for you so there is no need to waste time going to H&R Block or any other company.  Jackson Hewitt and Liberty Tax offer similar gimmicks. Jackson Hewitt allows taxpayers to go to Walmart to get their taxes prepared.  You have the following options:

• Get a Walmart prepaid debit card which requires you to load money onto the card for a fee.
• Receive a $10 Bluebird American Express gift card or get your tax refund for free if you get direct deposit
• Get at $20 Walmart gift card if you file your taxes online.
• Get a $50 Walmart gift card if you file your taxes in a Walmart store.

These are all gimmicks to get you in the Walmart store to shop. These companies charge higher prices, are inexperienced, make mistakes, use gimmicks, may not be honest, add a protection clause or an arbitration clause in their contracts which prevents taxpayers from suing them in court.

The alternatives to filing with the tax preparation chains are:

1.      File your taxes using a tax preparation software.

2.      File your taxes by mail.

3.      Hire an accountant or CPA.

4.      If you earn less than $60,000 go to a free tax preparation center by calling 800-906-9887 or using the site http://irs.treasury.gov/freetaxprep/ or use free tax preparation software which can be found on www.irs.gov.

5.      Use IRS Free File if your adjusted gross income is $60,000 or less.

6.      If your income is above $60,000 you can use Free File Fillable Forms available on the IRS website www.irs.gov.

7. Use an authorized tax efile provider which can be found on www.irs.gov.
8. Comparison Shop. Go to at least 3 companies to get price quotes to help you find the best deal.
9. Price match. Ask about price match guarantees that honor competitor prices.
10. Go with your gut. Use common sense. Go with your gut instinct, if you feel like the deal is too good to be true or if you feel like something is not right with the loan, don't sign it.
11. Ask questions. Ask lots of questions; have everything explained to you prior or during settlement.
12. If you still decide to use a tax preparation company and don’t want to pay their fee, you don't have to pay. You can take your paperwork, leave and look for another company to prepare your taxes.

Be wary of people or companies that brag about getting you large refunds, provide guarantees, or offer to get your refund quicker without ever seeing your taxes or knowing anything about you. When looking to hire a tax professional things to consider are:  qualifications, licensed in your state, experience, past references, work hours, professional reputation, trustworthiness, professionalism, professional memberships, your specific tax needs, comfortability and capability. 

Organization is Crucial to Filing Your Taxes

Every year Americans have to file their taxes.  Many dread filing their taxes because it can be a tedious and time-consuming process.  There are tons of tools available to help prepare your taxes and determine if you will get a refund or owe money.  You can file your taxes on your own and hire a CPA to file your taxes.

One of the reasons many Americans end up owing taxes or miss out on claiming deduction is because their they are not organized.  Many taxpayers throw away, misplace, destroy or damage receipts or even falsify documents because the original documents cannot be found. 

Don't wait until the last minute, this year start early and gather all of your receipts and financial paperwork.  You can use an automated tool to track your spending and deductions; use a piece of paper, or word processing software such as Excel or Access.  Getting organized will help you to see right away what deductions you are eligible to receive.  Organizing your paperwork makes it easier to file your taxes because all your informations easily accessible.

Using a tax preparation tool has all the tax laws imbedded in the tool which makes it easier for you to see what deductions and credits you are eligible to claim.  Here are 8 smart ways to help you organize before filing your taxes.

1. Duplicate. You can ask for duplicate receipts or financial statements if you have misplaced your copy.
2. Gather. Gather all receipts, monthly, quarterly and yearly statements, medical bills, student loans, credit card statements, prescriptions, financial statements, etc. and place in one easy to find location.
3. Categorize. Categorize all receipts such as medical, loans, financial statements, purchases, business expenses, debt, charitable donations, income, etc.
4. Deductions. Identify all items that can be used as itemized deductions and put them in one folder. Determine if the standard deduction for your tax bracket is greater than your itemized deductions. If not, calculate your itemized deductions.
5. Automation. Use a tax software package like Quicken, Turbo Tax or Tax Cuts.
6. Go Green. To save money file your taxes electronically. You will receive your refund in approximately two weeks from the date of filing and this will you help save the environment. 
7. Free Filing. If you salary is less than $58,000 or less you can file your taxes electronically for free.
8. Companies. If you use a chain tax preparation company you can bring all of your receipts and they will enter the data for you to prepare your taxes.