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Since my last article was about the IRS, I want to pull the focus a little closer to home and share some inside secrets from the tax preparer's perspective. To be clear, these are my opinions, not the opinions of everyone in the tax industry. Let's face it, that would take a lot of work! I also want to add that while I do prepare taxes in Summit County and I have the privilege of writing this column, Summit County is blessed with several excellent tax firms. We each have our areas of expertise, and unique personalities, so if you are choosing a local firm, it's important to find a fit that works for you — tax preparation is not one size fits all!
So here are a few insider secrets. The first thing I suggest to people is that off-the-shelf software does have its place in this market. I often recommend it to clients who have simple returns with just W-2s — they will be just fine using the software. This often applies to college-aged students, and I think it's important that young people prepare their own returns for at least the first few years of their career so they understand the flow of the documents.
However, more complicated transactions like stock sales, education expenses, retirement draws and self-employment generally lead to more complicated tax returns, and more room for error. In most cases, it is more cost effective to get a tax return correct from the start than to have to amend it later. If you are willing to spend the time to fully keep up to speed with tax law changes, then you may be able to continue doing your own return as life grows more complicated. But if you aren't willing to make that commitment, then hiring a professional is the way to go.
Another secret of tax preparers is that we greatly appreciate those who get their documents to us early, and organized. Have you ever heard of a PITA fee? Ask a tax preparer some time and see if they know what that is. While every firm has its own pricing structure, many that I have talked to say that the early birds get the best rates. Even if you have a few pages that are missing, such as K-1s that haven't arrived in the mail yet, you should ask your tax preparer if they'd rather have 98 percent of the stuff in early February and receive the remaining documents later in the year. Often times, they will appreciate this gesture.
The last advice this year is that the tax preparer's world has changed a bit. The IRS now requires all tax preparers to be licensed (unless they are already a CPA or other designation above tax preparer). The goal is to have preparers traceable so that if they are abusing the tax code, the IRS can follow up more easily. If you are using a paid preparer and they say they cannot sign your tax return, it needs to be marked “self-prepared,” you should find someone who is licensed. That's often a red flag that they are filing returns under the radar, and you will lose the protection otherwise allowed by the IRS.
Michele Knight, owner of Knight Accounting & Technology, is a CPA and QuickBooks ProAdvisor based in Dillon. For more info ad to contact her, visit www.cpamichele.com.
So here are a few insider secrets. The first thing I suggest to people is that off-the-shelf software does have its place in this market. I often recommend it to clients who have simple returns with just W-2s — they will be just fine using the software. This often applies to college-aged students, and I think it's important that young people prepare their own returns for at least the first few years of their career so they understand the flow of the documents.
However, more complicated transactions like stock sales, education expenses, retirement draws and self-employment generally lead to more complicated tax returns, and more room for error. In most cases, it is more cost effective to get a tax return correct from the start than to have to amend it later. If you are willing to spend the time to fully keep up to speed with tax law changes, then you may be able to continue doing your own return as life grows more complicated. But if you aren't willing to make that commitment, then hiring a professional is the way to go.
Another secret of tax preparers is that we greatly appreciate those who get their documents to us early, and organized. Have you ever heard of a PITA fee? Ask a tax preparer some time and see if they know what that is. While every firm has its own pricing structure, many that I have talked to say that the early birds get the best rates. Even if you have a few pages that are missing, such as K-1s that haven't arrived in the mail yet, you should ask your tax preparer if they'd rather have 98 percent of the stuff in early February and receive the remaining documents later in the year. Often times, they will appreciate this gesture.
The last advice this year is that the tax preparer's world has changed a bit. The IRS now requires all tax preparers to be licensed (unless they are already a CPA or other designation above tax preparer). The goal is to have preparers traceable so that if they are abusing the tax code, the IRS can follow up more easily. If you are using a paid preparer and they say they cannot sign your tax return, it needs to be marked “self-prepared,” you should find someone who is licensed. That's often a red flag that they are filing returns under the radar, and you will lose the protection otherwise allowed by the IRS.
Michele Knight, owner of Knight Accounting & Technology, is a CPA and QuickBooks ProAdvisor based in Dillon. For more info ad to contact her, visit www.cpamichele.com.
