If you read my last blog on Getting Organized for Tax Time, you remember that over 150,000,000 Americans will file a tax return this year. Tax preparers and software vendors will dominate advertising space over the next few months. They want to convince you that using their product or service will net you the largest refund, or make filing your taxes easy. Recent ads suggest that you would have to be an idiot to not be able to figure out how to file your return. To top it off, most products even advertise Free filing.
To get a better feel for “Free” tax filing, I logged on to a number of online tax services and found that “Free” is only for the very simplest of returns 1040EZ/A. Once on their website you generally find that they offer other, not so free, products that “Maximize” deductions or guarantee accuracy. (Understand that they guarantee the accuracy of the calculations that their software provides and not the accuracy of your input.) Many online products offer audit defense insurance at a price that is just as expensive as the tax filing fee. I suggest that you weigh your risk of audit and the likelihood that changes could be made against the additional cost of defense insurance before clicking that box.
If after preparing your returns online you are still anxious, don’t feel alone. Each year I have a handful of clients who ask me to check over their self-filed returns. The majority need some tweaking, not because the people are not smart but because they do not understand the tax code and do not know what the outcome should look like. They check a box here or there and click “Next” without really understanding the underlying tax code. If this fits your description, I suggest that you schedule an appointment with a Volunteer Income Tax Assistance program (VITA) or professional tax preparer.
By professional, I mean someone who is credentialed as an Attorney, CPA or EA. These people have passed rigorous exams to practice before the IRS and have annual education requirements to give them a better understanding of the tax code. Never engage a person to prepare your return who guarantees you a refund or who is not willing to sign it.
How do you find a professional that will be a good fit for you? Do a little homework before scheduling an appointment; visit a few websites, ask your attorney, banker or investment advisor who they suggest. Finally, set up an appointment to make sure that the relationship will be a good fit for you. A good preparer should have years of experience with your personal situation and be willing to give you an estimate of their fees before you make a commitment.
A good professional understands your personal situation and the tax code, and should be able to help you to pay the lowest amount of tax allowed under the law without sleepless nights worrying about the IRS.
Jamie Boulette, CPA has 30 years of tax experience and is managing director of One River CPAs with offices in Bath and Oakland. He can be reached at firstname.lastname@example.org or 207-873-1603.