It's the end of the year, time to start thinking about your taxes. If you need help preparing your taxes this year, the time to call a pro is now.
Do not rush to hire just anyone. It is important to put in the time to research who will be going through your taxes.
Millions of Americans file their own taxes, but how many of them aren't taking full advantage of tax deductions or tax breaks they qualify for but don't know about?
"Hiring a professional can actually help you take some deductions you didn't even know you were eligible for,” explains Angie Hicks the Founder of Angie’s List. “A lot of times, people think mileage for work is a possible deduction. We had one member that was commenting on how she was required to stay up on the news, and because of that, she was able to deduct her cable bill because she needed it for work."
"Having a CPA do my taxes has saved me hours and probably thousands of dollars in taxes," says Mike McManus a consumer.
You want to find someone you trust and ideally, develop a long-lasting relationship with. That way they know your finances and can help you if you've missed deductions.
"Folks should set up an appointment as soon as anything changes in their financial situation from the year before,” explains Jennifer Harris a CPA. “It's never too late to educate yourself on what your situation is for that year. So, anytime during the year is the best time to schedule an appointment. You need to make sure you have the right documentation before you take a deduction. Never estimate or guess based on last year or prior-year numbers. Specifically for 2012, make sure that if you are issued a 1099 or receiving a 1099, you do it correctly. The IRS is really cracking down on 1099 miscellaneous income and you never know when you'll be selected for an audit. So, make sure that the documentation you have is what you would be able to explain to an IRS agent. "
You should also know that your tax attorney or CPA will take care of you in case of an audit.
"Although it was an expense I could not see myself necessarily being comfortable with, I went ahead and took the leap, hired a CPA, gave them all the paperwork and it was such a relief at first,” says Jim Cockrum a consumer. “My first reaction was, 'Wow, this is nice. I'm willing to pay someone to do this for me.' But, then I quickly realized it was an investment, because she found things that I hadn't noticed. She told me and reassured me that I would never have to deal with the IRS; that that was her job in the case in of an audit; that she would be the one going in between and asking me for exactly what she needed to help get through that time. So, don't be nervous about audits."
Many of us hate the idea of hiring someone to do something we think we can do just as well. When it comes to taxes, the laws change and it's hard for anyone but a tax professional to keep up with them.
Lots of people think they can file their own taxes but they really need to keep in mind they might be missing opportunities to get tax refunds by doing it themselves. Because they might not truly understand the full scope of the tax law, they might not be able to take advantage of all the deductions they possibly could.
Angie's List's tips for hiring tax help:
• Hire help or go alone? It's probably fine for most people with simple tax situations to prepare their own returns. However, for those with more complex situations, calling a professional is the way to go. Consider having the same person prepare your taxes every year. The longer you work together with someone, the more familiar they become with your needs -- and the more likely they are to do a great job for you.
• Check credentials: Few states require tax preparers to be licensed, so it's up to you to find a qualified and reliable professional. Good bets are CPAs, tax attorneys, and enrolled agents - they are required to undergo education and testing requirements. Ask the preparer about his/her training. Will they represent you in case of an audit? Will you be able to contact them after the return is filed? Reputable tax preparers
• Ask for an estimate: There is a wide range of tax preparers with varying fees, so know up front what you're paying for. Beware of preparers who claim they can obtain larger refunds than other preparers. Fees are generally determined by an hourly rate.
• Money-saving tip: Get all your receipts organized to cut down on the amount of time your tax preparer has to pour over your finances.
• Get references: Ask questions from clients who have used the tax preparer before. Were they satisfied with their service?
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• Do your research: Visit the IRS
• Make sure your pro is filing online so you can get a quicker refund: The IRS claims the e-file option is fast, secure and those who elect for a direct deposit can get their refund in as little as 10 days.
• Double-check your math and data entries and review your entire form: Math errors are some of the most common mistakes on tax filings. Make sure your Social Security and other identification numbers are correct. If you're filing a joint return, make sure you both sign and date the form.
• Check your return: Although the preparer signs the return, you are responsible for the accuracy of every item. Read it carefully and ask the preparer for a copy of the return.
• Keep track of your paper trail: The IRS has three years to audit returns, so they suggest holding on to your paperwork for at least three to seven years.
• Consolidate the clutter: If your pile of receipts has gotten out of control, try photocopying as many as you can onto a single sheet of paper, or scanning them onto a single computer file. It will be easier to organize your invoices, save room and keep your accountant from being buried under an avalanche of paperwork.
• File even if you owe the IRS, but can't pay: Submit the tax return by the due date and contact the IRS to ask if you can set up a payment plan. The IRS will charge a fee to set up a payment plan, but if you can't pay all at once - this is the best approach. The same applies to your state return.
• Small business owners: Take all of your records from your business -- your checkbook, prior tax returns, and any documents you received from the IRS. When in doubt about a form, take it to your tax preparer to let him or her decide if it's something they need.