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2010 CCH Whole Ball of Tax
Need Tax Help? CCH Says Start Early and Ask Questions
(RIVERWOODS, ILL., January 2010) – Most people will need all the help they can get when they prepare and file their taxes this year, according to CCH, a Wolters Kluwer business and a leading provider of tax, accounting and audit information, software and services (CCHGroup.com). As one measure of what taxpayers will be dealing with, the massive stimulus bill enacted last February – the American Recovery and Reinvestment Act – contained over 50 provisions affecting 2009 and 2010 returns, and some of those provisions were changed again by the Worker, Homeownership and Business Assistance Act, signed into law in November.
“The complexity of your tax return and your own self-confidence may determine whether you prepare your return with pen and paper, take advantage of do-it-yourself tax preparation software or hand the matter over to a professional tax preparer,” said CCH Senior Federal Tax Analyst Mildred Carter, JD. “The one certainty is that whatever route you take, it’s best to start early.”
Evaluating Tax Professionals
If you choose to hire a tax preparer, you are in good company. Each year, more and more taxpayers look to a professional for help. In the filing season for 2007 returns, for example, nearly 60 percent were prepared by paid preparers.
But before putting yourself in the hands of a professional, you need to ensure you have chosen that firm or person carefully. At the end of the day, you are responsible for what’s on your return, even if it is prepared by someone else.
Here are some tips to finding the tax professional who is right for you.
1. Identify Several Qualified Candidates
- Go with know-how. It’s a good idea to look for a tax professional who has consistent experience in tax, especially since tax laws change frequently.
The increasing use of time-delayed effective dates and rate changes that are phased in and out means changes can sneak into the tax code with little notice. Unless you’re tracking tax developments every day, chances are you’re not aware of all of the changes that have taken effect. With this in mind, you may also be interested in knowing the preparer’s credentials and if she is a member of a professional organization, which encourages or requires members to pursue continuing education.
While attorneys, CPAs and enrolled agents are required to take continuing professional education courses each year, and employees of large tax preparation firms have to complete training classes, other tax preparers currently are not required to keep current on tax laws or prove they are knowledgeable about taxes. The IRS has recently proposed a system of registration, testing and continuing education for these “unenrolled” preparers, but it won’t be in place for this tax season. Feel free to ask any potential preparer how he or she keeps up with changing tax laws.
- Ask your friends. Ask friends with financial situations similar to your own if they can recommend to you someone they have worked with successfully.
- Contact your state CPA, Legal or Enrolled Agent organizations. Many state organizations maintain databases of local accountants and other tax preparers and will provide free assistance in helping you select a tax professional in your area. Also, many of these organizations provide free assistance to low-income taxpayers who may not be able to afford tax preparation help. Finally, there are a number of Internet sites that provide listings and directories of accountants organized by locality.
2. Ask Questions
Here are some of the questions you will want answered when evaluating professionals:
- What is your experience and do you have a specialty? Some tax professionals have specialties or gear their practice to particular types of professionals or individual taxpayers. If you have specific concerns or have not been directly referred, ask for references. Also, if you have financial interests in states other than where you live, make sure your tax professional is familiar with those state laws.
- How do you bill your clients? Before you ask your tax professional to do anything, get a good idea of how he bills and the level of detail provided. Is the charge an hourly rate or a straight fee? How will you be billed? Will you be billed for research time if needed? To avoid confusion, get the billing and payment terms in writing.
- How do you characterize your professional style? Find out how aggressive an approach the preparer takes to minimize the tax burden. Would you prefer that she is reasonably aggressive, or would you prefer a practitioner who takes a conservative path even if it means paying a few extra dollars?
- If I am audited, will you represent me? Ask if he would represent you if the IRS questions your filing or decides to audit you. Although audits remain rare, they’re still unpleasant and time-intensive for those individuals that face an IRS examination. So, ask prospective accountants how much experience they have with IRS audits. While some experience is good, too much can be a warning sign.
- What do you need from me? Before providing information to your tax professional, ask exactly what information is needed and in what form. Many professionals provide print or electronic “organizers” to help you sort your financial records. Some ask that all tax information be saved on a diskette, which can be downloaded into tax return software. The more organized you are before you give your tax preparer your records, the better she is able to help you. Beware of a preparer who does not ask for details and documentation of your income and deductions.
3. Do a Final Check
- Make sure your CPA is licensed by the state CPA association. If you decide to hire a CPA, check with your state CPA society to verify his or her license and to see if any complaints have been filed. If complaints have been filed, look elsewhere.
- Take a good look at your return before it is filed. Even if your return is prepared and signed by a paid professional, you are responsible for the accuracy of everything listed. Make sure the information on your return is accurate.
Evaluating Do-it-yourself Online Options
Increasingly, taxpayers are also turning to online solutions as a way to prepare and file their taxes more easily and accurately. Almost all programs offer the ability to e-file your return, which catches simple errors and speeds refund checks. That said, with the numerous online options available today, taxpayers should take some time up front to ensure they are selecting a solution that’s right for them.
Some questions you should seek to answer when evaluating online tax preparation software include:
- Is the software provided by a name I know and trust? Now is not the time to take chances! You’ll want to find a package with the right options, features and price for you, but before you delve into the details, make sure you are going with a provider with a name you know and trust.
- Is the software easy and secure? Using online software can save time because you don’t have to download the program onto your computer. But you also want to make sure the program is easy to navigate, helps you organize your information in a way that makes sense to you and provides the support resources you need to complete your return. One example is a plain-language glossary of terms and an information guide clearly explaining how to handle various tax situations you may encounter. You also want to make sure the online tax service you choose encrypts your data using recognized Internet security standards.
- Can I work at my own pace? Online tax preparation sites allow you to password protect your work, coming back as often as you need. Make certain the program also automatically checks for errors or oversights and provides links to the pages where the problems occur so you can quickly spot and correct potentially costly mistakes. Also, while a growing number of taxpayers are now e-filing, check to see that you have the ability to print and review the final forms before they’re electronically filed with the IRS or state revenue department.
- What becomes of your return after you file? One benefit of some online programs is that they will save your prior year’s return, allowing you to print the return should you need another copy. Also check to see that it allows you to carry over basic information from one year to the next, saving you more time when you begin this year’s tax return.
- Does it clearly show the cost of preparing and filing both federal and state returns? Navigating the complex pricing structure used by some tax software providers can be frustrating to taxpayers. Some promote a federal tax return price or free federal filing but don’t point out the significant added costs for completing and filing a state tax return. Others have a multi-tiered pricing structure that can add up to equal the fees of some tax preparers.
- What are the payment and refund options? Many sites now allow you to deduct the cost of using their program from your expected tax refund. Most also allow direct deposit of your refund into your bank account, allowing you to access your refund even faster. Some sites also have partnerships with firms that provide an advance payment of your refund. If this is a feature you’re interested in, proceed carefully, making certain the associated fees and interest are reasonable.
- What are the help and support options? Ideally, the tax prep program you’re using should be straightforward so you do not need support. However, you will want this safety net, so look to see that the program offers the support features you want, such as e-mail or live online chat. Premium support features, such as live phone or online chat, may come at a nominal charge.
- Do you qualify for Free File? Free File is an IRS-sponsored program that allows individuals who meet certain income and other qualifications to use commercially-supplied online software and file electronically for free. The commercial vendors participating in the program each can set their own qualifications for participation. It’s important to access the program through the IRS web site, IRS.gov.
“Although your federal return is free with the Free File program, vendors may charge extra for a state return or for additional services, such as a refund anticipation loan,” Carter noted.
About CCH, a Wolters Kluwer business
CCH, a Wolters Kluwer business (CCHGroup.com) is a leading provider of tax, accounting and audit information, software and services. It has served tax, accounting and business professionals since 1913. CCH is based in Riverwoods, Ill. Wolters Kluwer is a leading global information services and publishing company. Wolters Kluwer is headquartered in Alphen aan den Rijn, the Netherlands (www.wolterskluwer.com).
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