It’s almost that time of year again. No, not Christmas nor New Year’s. I’m talking about the time of year when people get frantic either in anticipation or dread of tax time. For those who choose to have their taxes professionally prepared, the tax preparation process can go a lot smoother if you take these simple steps:
Come prepared
Taxes intimate many individuals. Some of that intimidation comes from not knowing what to expect tax times and not knowing what paperwork to bring to the tax office. The last thing you want to do is forget the necessary forms at home and have to make a second trip to the tax office. Coming to the tax appointment, unprepared can waste time and make the experience more stressful than necessary. The best way to prepare is to make a list. Write down the sources of income you receive and make sure you have a form to match each source. You will start receiving tax-related documents in late December to early February. Start collecting documents as you receive them and store them separately from other documents. When it’s time to get your taxes done, you will have all your forms in one location. If you are unsure of what forms you need to bring, call, and ask the tax office, which leads me to my next point.
Ask questions beforehand
Always ask for clarification if you do not understand. Taxes can be complicated, and the average filer does not understand all the rules and requirements. Make a list of questions that you need to be answered before the appointment so that you know what to expect going in. Make sure you ask what identifying documentation you may need to bring with you. Most tax offices require a photo id and social security card for yourself and any dependent on your return.
Understand the cost, and cost options
Ask for a quote before you get your taxes prepared. Tax preparation can be expensive, and prices vary from business to business. If a company is not willing to give you a quote over the phone, make a trip to the office. Most companies will look over your paperwork and give you an estimate of fees. Tax companies are not inflexible. Once you’re at their desk, they will usually try to get you to stay. Don’t except the first price they give you, if you bring up a price objection, they will typically reduce your fees. Most tax companies have multiple pricing options, always ask for discounts or promotions before you pay. Many companies offer military, senior, and other sponsored member discounts. If you can’t pay your fees upfront, some companies will take the preparation cost out of your refund, if you are due one.
Be selective in choosing your tax agent
Every tax preparer is not created equal. You should select a preparer based on the complexity of your return. If you have a complicated return, always request a senior tax preparer or one who has credentials such as an EA (Enrolled Agent). You can usually get a lot of information about the best preparers from the receptionist. Ask who clients like best or who has the most experience. If you work in a specified field that calls for specials tax rules, ask which preparer specializes in those types of returns. Never settle, if the preparer you want is not working at the time, set an appointment to see them when they are available. Having the right preparer can help you maximize your deductions and ensures that your return is prepared accurately.
Ask about protection programs
Protection programs can seem like a waste of money, but when IRS issues arise, they can save you thousands. Most people consider the cost of tax preparer insurance useless, but that is because they are only considering the upfront cost. If your preparer makes an error on your return, most companies will fix the mistake in the paperwork for free, but they will not cover any IRS fees or penalties related to the error that was made. The tax filer is the one who has to pay IRS fees, penalties, and interest that occur as a result of mistakes made during tax preparation. To protect yourself and your wallet, most tax companies offer tax insurance. If an error is made, insurance will cover the cost, up to a certain amount, that you may owe to the IRS as a result.
Every filer does not need to purchase tax insurance. It depends on how complicated your return is. If you are a basic filer with a W2 and minimal deductions, you probably don’t need tax insurance. If you have multiple types of income forms, are self-employed, have high deductions, or any special tax requirements, the insurance is a worthwhile investment.
Know the after-sale benefits
Once your return is complete, make sure to take advantage of any post-service benefits. Tax companies usually have a list of services that are exclusive to their customers. Benefits range from audit support to year-round customer support. Some companies have apps that allow you to store tax documents electronically, instead of retaining physical copies. Ask your tax specialist what services they offer to their clients. If a tax office does not have after-service benefits, it is probably a good idea to find a different company. IRS issues can arise at any time throughout the year. You should choose a company that will be available to support its clients when such issues occur.
By Michelle Mobley
Senior Tax Specialist