Many taxpayers, however, decide they prefer professional tax help to complete their returns. This could be the route for you if:
Why you might want a tax pro
- You are intimidated by the whole tax-filing process.
- You don't want to devote the time necessary to prepare your return.
- You've had a major change in your life that's going to make filing more complex this year.
- You believe that by hiring a tax pro, you'll save more than enough on your tax bill to cover the cost.
Types of tax pros
If a tax professional is appropriate, then you must decide which type of pro to hire. There are different types with differing experience levels. Some meet stringent professional requirements; others have minimal accreditation. Below are some of the more common choices when hiring tax-filing help.
Franchise tax service: National tax preparation chains, such as H&R Block and Jackson Hewitt, do a booming business. And for many, the companies are a good choice. The tax preparers get some training on the most common tax situations and use software that helps ensure major questions and situations are addressed. If your return is not that complicated, this could be an appropriate, and relatively inexpensive, tax pro choice.
Enrolled Agent: An Enrolled Agent, or EA, must pass an IRS-administered exam. Many are former IRS employees. In addition to meeting a federal certification standard, an EA can represent you before the IRS if the agency has any questions about your return; attorneys and CPAs also are able to provide this service. The National Association of Enrolled Agents provides an online search tool at its Web site to help you find an EA in your area.
Certified public accountant: A certified public accountant, or CPA, must pass a state's qualifying exam for accounting. However, not all CPAs specialize in taxation, so double check before you hire one. If the CPA does, he or she can help you design a comprehensive tax plan, a service that's especially welcome if your financial and tax situations are more complex. As with an EA and attorney, a CPA can represent you before the IRS.
Tax attorney: A tax attorney has received extensive training and is required to complete continuing education courses. This usually is the choice of taxpayers who have very complex tax considerations, such as business ownership, estate planning issues or who are interested in sheltering income. Many tax attorneys specialize in specific areas, so check to make sure the one you select addresses your tax issues. Also be prepared to pay substantially more for help from these tax pros.
Tax filing and planning is a unique exercise for each taxpayer. You have many options, so carefully assess your personal situation and consider just how much tax help you want or need in deciding which tax professional to hire.
Kay Bell, a freelance writer based in Austin, Texas, writes two tax blogs, Bankrate's Eye on the IRS, and Don't Mess With Taxes. She currently is a member of the IRS's Taxpayer Advocacy Panel.