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SALT LAKE CITY — It is never too early to begin preparing your taxes, and the earlier you file, the more you save. On average, studies show tax procrastinators overpay by about $400 as a result of mistakes made due to rushing the process and last-minute changes. With this in mind, and W2s coming from employers during the next month, it is time to start prepping.
One of the first steps is deciding whether or not you are going to hire a tax professional. While some people are fairly confident preparing their own taxes, 90 percent of Americans choose to have professionals handle their returns or rely on an online service. Hiring a tax professional is highly recommended if you had a major life change in the last year (a move, job change across state lines, marriage, divorce, birth of a child, purchase or sale of a home).
There are more tax preparers in the U.S. (1.2 million) than there law enforcement officers (765,000) and professional firefighters (310,400) combined. - The George Washington University
There are 1.2 million tax preparers in the United States. In fact, there are more professional tax preparers than law enforcement officers (765,000) and professional firefighters (310,400) combined, according to a recent study by The George Washington University. So, how do you know which one is right for you?
Tax preparers range from lawyers and enrolled agents to certified public accountants (CPAs) and storefront agents. Here are some guidelines for finding the right fit for you:
The Good Guy (or Gal)
A good tax preparer will not just plug in numbers—they will provide advice and direction. They should ask a lot of questions to ensure you are getting every legitimate deduction possible. They will not only focus on this year's taxes, but discuss how you can reduce next year's taxes as well, and some will even review last year's taxes for accuracy. Once your taxes are filed, a good preparer will be available should you have any questions or issues after the April deadline.
Can I see some ID?
Always check a tax preparer's qualifications up front. All paid tax return preparers must have a Preparer Tax Identification Number. Also find out if they are affiliated with a professional organization and receive continuing education and resources, as tax code is very complicated and tax law changes.
The Background Check
The Better Business Bureau can be a great resource to check a preparer for questionable history. State boards of accountancy for CPAs, state bar associations for attorneys, and the IRS Office of Professional Responsibility for enrolled agents can also provide information on disciplinary actions and licensure status.
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Red FlagsAnyone who says they can obtain a larger refund than other preparers or promises a big refund upfront should not be trusted. You should also avoid preparers who charge a percentage of your refund rather than a flat rate, and never work with anyone who asks you to sign a blank tax form.
The Perks
Some tax preparers do not require an appointment. If your schedule is up in the air, seek out a storefront agent who allows this. And for those who are too busy, some preparers will allow you to simply drop off your W2s and tax documents; they will handle all of the paperwork, then sit down to review and sign when you are ready. Some can also save you more money by offering free 1040EZ filing, the easiest of the three IRS filing forms, and free e-filing, while others will charge for these. Credit unions tend to offer all of these perks and cost significantly less than other tax preparers.
The Fine Print
Just because you used a tax preparer does not mean you can just sign the dotted line. Review the entire return and ask questions. You are paying a professional to have peace of mind and you should be comfortable and confident the return is correct before it is filed. After all, you—not the preparer—are responsible for the accuracy of the return.
Whether you hire a lawyer, enrolled agent, CPA or storefront agent, keep these tips handy to help you find the tax preparer that is right for you. So get your W2s and supporting documents ready—it is time to get a head start on your taxes.
Sharon Cook is the senior vice president of Marketing and Public Relations for Mountain America Credit Union