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By Lia Blanchard

Just like death, Tax Day looms ever closer for all of us. We’re less than six weeks away now – if you haven’t even thought about getting ready to file, this article is for you. (And if you’re a diligent type who’s already filed, you might want to read on anyway, in case there’s something here to help you be even more diligent next year.)

Should I do my own taxes, or should I find a professional tax preparer?

The first question is whether or not to do your own taxes. If your financial life is fairly simple – straightforward W-2s, mortgage interest statements, no business income or complex buying or selling going on in the tax year – then you should be able to file your taxes yourself. But being able to do it yourself doesn’t necessarily mean you SHOULD do it yourself – if looking at numbers makes your eyes cross and drool start to form in the corner of your lips, it may behoove you to find someone else to do it, no matter how simple your situation is.

How do I find a reputable tax preparer?

Tax preparers might be an attorney or CPA, or might be what is called an “enrolled agent”. All of these people have been certified by the federal government to assist and represent taxpayers in their dealings with the Internal Revenue Service. Attorneys and CPAs have additional professional endorsements and are licensed to practice their profession within individual states.

As with any investment – and paying a tax preparer is an investment, since you’re spending money to get or save money – do your homework first. Particularly if you intend to have someone else do your taxes every year, you’ll want to find someone you communicate easily with, so you can build a relationship on trust. This person will be handling some very sensitive financial and identifying information, after all; information you wouldn’t just hand to any Joe on the street. In fact, as Life Happens, you may find yourself dealing with your tax preparer – who may also be a CPA and/or attorney – on a fairly regular basis, for important Life Issues. Is the guy in the booth in Wal-Mart the one you want? As you speak to a potential tax advisor, ask yourself these questions:

  • Is this person asking me a lot of questions to get to know me and my personal situation, or is s/he just waiting for me to supply numbers to type?
  • Am I being advised not only on last year’s information, but on what to do to reduce this year’s tax load?

If I do my own taxes, I’d like to do it at the computer, using software. Which are the best ones?

Few people do their own taxes by hand these days – the tax code is just too complicated, and is constantly changing. In fact, IRS Commissioner Douglas Shulman reported in November 2011 that there had been 3,000 tax law changes since 2000. Ninety percent of Americans pay money for tax preparation software or a tax professional, just to keep up with the changing laws.

If you want to do your own taxes, the first thing you need to determine is whether or not you want to use browser-based technology. Browser-based software will store your information “in the cloud” – on secure remote servers – where you can work on your return from any device with internet access. The alternative is to purchase a CD or download the software to install onto your desktop. The general consensus is that desktop software is less convenient, but offers more control.

It is not within the scope of this article to review the software, but popular options – in both cloud-based and desktop-based software – include TurboTax, H&R Block At Home, TaxAct, and TaxBrain. If your Adjusted Gross Income is below $57,000 you may be able to use Free File tax software and file without charge. Click here to see if you qualify for Free File.

Get Ready

The drill is the same whether you’re using software or enlisting a professional preparer: get your stuff together! This includes, but is not limited to:

  • Income: W-2s, 1099s, investment accounts, retirement accounts
  • Records of major purchases: vehicles, homes, etc
  • Charitable donations or gifts
  • Statements of interest paid on mortgage (form 1098)
  • For credits or deductions: receipts, statements, logs, and records

Write it off

When your taxes are finished, you can write it off of your to-do list – and this year’s taxes! That’s right; whatever you paid your tax preparer or for your software is deductible from this year’s taxes.

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