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- Should You Choose
a Tax Preparer or Go It Alone?
- BY JIM LARRANAGA
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- Talking about
Money with Jim Larranaga
(ARA) - There
are two things that are necessary, but unnecessarily tedious,
in life -- laundry and taxes. I can't help you with your laundry,
but I can provide pointers to help you wring out the most from
your tax return.
Completing
your taxes on your own may save you the fee of hiring someone
else to do it, but unless you're an expert, it could cost you
more in the long run. If you decide to hire a tax preparer, it's
important to know your options.
National Tax
Services: Most taxpayers with routine returns can benefit from
one of the nationally advertised tax services. They're open nights
and weekends during tax season and often operate on a first-come,
first-served basis. Costs vary with each franchise, but in general
stick to the theory that the more forms and lines they have to
fill in means the more numbers you place at the end of the check
you write them.
Enrolled Agents:
If your return is more complicated, an enrolled agent may be
the answer. They are licensed by the federal government and are
able to represent you before the Internal Revenue Service. Enrolled
agents are paid by the hour, with fees a bit more than those
of national services.
Enrolled agents
are required to complete a minimum number of credit hours of
continuing education each year. They can:
- Prepare tax
returns
- Answer questions
regarding national, state and local tax laws
- Provide tax
assistance for estates, trusts, partnerships, corporations and
other entities that are required to report taxes.
- Practice anywhere
in the United States
CPAs: Unlike
enrolled agents who specialize in preparing taxes, certified
public accountants specialize in accounting methods not always
pertaining to taxes. I suggest using a CPA if you have recently
experienced major changes, such as marriage, divorce or retirement,
or your tax return is complex for any other reason.
The price tag
for a CPA is a bit higher than an enrolled agents' and depends,
again, on the type and length of services required.
Tax Attorney:
Tax attorneys are the cream of the crop, so to speak. While their
fees are higher -- sometimes reaching a few hundred dollars an
hour -- their expertise is also more refined. They are well-informed
on tax laws and their applications can litigate tax disputes.
I suggest a
tax attorney if you are using complicated tax shelters. Their
knowledge is also handy if you're dealing with estate planning
or divorce proceedings.
Buyers Beware: Remember, no matter
who does the work, your name is printed on the return, and you
are solely responsible for any false information provided to
your tax preparer.
_______________________________________
Author:
Jim Larranaga
is president of Priority Publications, a Minneapolis-based publisher
of financial newsletters.
Courtesy of
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