You may need more help than usual with your tax return this year, especially if you have done some freelance work, started a business, lost your job, received unemployment benefits or qualified for various tax deductions.
You can use tax software or an online program, and if your adjusted gross income was $ 72,000 or less by 2020, you can file your federal income tax through the IRS Free File program, where the IRS cooperates with several online taxpayer companies.
But you may want personal assistance when submitting your return this year. A tax expert can make sure you get all the tax breaks you deserve, especially in a year where your tax situation may be very different than it had been before. Many tax professionals can also help you with tax planning that can save you money in the future.
Remember: You have until May 17, 2021 to submit your tax return for 2020.
What kind of tax intermediary do you need?
There are a wide variety of options when searching for a tax advisor. Some just complete your federal and state returns and may charge very little if your tax situation is not complicated – if your income, for example, is from a full-time job where you receive a W-2. However, if you have had a few different jobs during the year, done some freelance work, started your own business or had other complicated tax situations, then you may need more help. An expert can help you figure out what business expenses you can deduct and can find breaks that you never knew you were entitled to.
Anyone with an IRS Preparer Tax Identification Number can file federal tax returns. But there is a wide range of experience and qualifications. Certified Public Accountants, Registered Agents and Attorneys can represent clients before the IRS in audits, payment matters and appeals. Participants in the annual filing season program are other tax intermediaries who have completed a required number of continuing education hours to prepare for the tax season. There are also PTIN holders who have not completed these certifications and are authorized to prepare tax returns, but who are unable to represent clients before the IRS. You can look up the tax information for taxpayers in your area using the IRS Directory of Federal Tax Return Preparers.
Here are some ways to get your tax return filed.
Certified Public Accountants
CPAs must be licensed, meet strict training and testing requirements, and meet ethical standards. You can find a CPA near you through the American Institute of CPA’s search tool. CPAs have different specialties. Some focus on companies and others more on individuals. Some CPAs also have the personal financial specialist credentials and can help with taxes and financial planning.
Registered agents are federally licensed and have unlimited rights to represent taxpayers before the IRS. They must pass a comprehensive exam and complete continuing education requirements. Many specialize in tax planning for individuals and audits. “A registered agent can represent both individual and business taxpayers at all levels of IRS investigations, collections and appeals,” said Morris Armstrong, a registered agent in Cheshire, Connecticut. You can find one through the National Association of Enrolled Agents.
You can also find CPAs and affiliates in your area through local organizations and referrals from friends and colleagues. They can complete your return and also help with tax planning throughout the year. Another option: TurboTax introduced a full-service program this year, which generally costs from $ 130 to $ 290, where you can upload your tax records and a CPA or registered agent will complete the return for you.
Tax preparers and independent preparers
Companies like H&R Block, Jackson Hewitt and other tax preparation services are working personally and largely this year. Prices may vary depending on the complexity of the taxpayer’s tax return as well as the location. “If a taxpayer has multiple part-time jobs, is self-employed or received unemployment benefits, they could have a more complex tax return,” says Mark Steber, chief tax officer for Jackson Hewitt.
For example, Jackson Hewitt offers personal meetings, drop-off services, online self-preparation or the Tax Pro From Home service, which is a virtual, personal tax service where customers are matched with a dedicated tax pro starting at $ 69 plus the fee per. government returns. Each Jackson Hewitt office has a CPA on their team, along with tax professionals who must complete a training program, Steber says.
H&R Block also offers a range of services, including personal, virtual and delivery services with their tax professionals. Prices start at $ 69 for a federal return and $ 65 for each state return. “H&R Block tax professionals have an average of 10 years of experience and hundreds of hours of training,” says Andy Phillips, director of the Tax Institute at H&R Block. All H&R Block tax professionals must complete 60 hours of initial training, and returning tax professionals must complete an additional 30 hours of training, he says. They all have access to the Tax Institute at H&R Block, which is a research group staffed by tax experts, including CPAs, registered agents, tax attorneys and former IRS agents.
Free tax preparation
Several cities, such as New York, Boston, Los Angeles and Miami, offer free tax registration to certain residents. For example, most New Yorkers who earned less than $ 68,000 by 2020 are eligible for the NYC Free Tax Prep, which is administered by the New York City Department of Consumer Affairs. There are free tax filing services nationwide that meet IRS standards. IRS voluntary income tax assistance and tax advice for seniors programs offer free tax assistance to eligible taxpayers, generally based on their income or age. The VITA program has been in operation for more than 50 years and offers free tax assistance to people who generally earn $ 57,000 or less, people with disabilities and those who speak limited English who need help with their returns.
What to look for in a tax broker
Ask friends or colleagues for recommendations, especially if they have worked with the tax intermediary or tax preparation company for several years. Also, check out the Better Business Bureau reviews and other reviews.
Make sure the tax intermediary matches your needs. Do you just need someone to submit your statement, or would you like them to help you with tax planning for the future?
For example, if you are starting a business, it may be helpful to work with a tax professional – such as a CPA or registered agent who specializes in small businesses – who can tell you about future deductions and tax planning strategies as you build your business. If you are about to retire and start withdrawing money from your tax-deferred retirement savings, this may be a good time to meet with a tax professional who also specializes in financial planning and can help you determine the most tax-efficient ways to tap on your accounts.
Ask questions about the returns so you understand what they have done and the credits and deductions they have taken, which can help you know how to take the tax breaks in the future. “A good tax preparer will explain each step of the process to a taxpayer and allow them to ask questions,” Steber says.
Ask what happens if you – or the IRS – have questions about your return later. Be wary of taxpayers who just set up shop for a few months each year and then disappear, leaving you with no help if you hear from the IRS with questions. “In addition to protecting your data, you want to find a tax professional who can help you year-round if you need to change a return or if the IRS returns with questions,” Phillips said.
Avoid tax preparer scams
Tax fraud is out in full force this year and you need to be especially careful before passing on all your personal information to anyone who could use it to steal your identity or your money. Some crooks use the information to get your refund or other public benefits in your name; others can take your money and never submit a statement, and then disappear when the tax season is over – before the tax authorities contact you with questions about the return.
Review the return before signing it and ask questions about deductions you do not understand. All paid tax intermediaries must have a Preparer Tax Identification Number and they must sign the return and include their PTIN on the return. Do not sign the return until they have signed it with their PTIN.
Ask the taxpayer about their fees before giving them your personal information. Be wary of preparers who charge a fee based on a percentage of the refund you receive. Sometimes they take out deductions you are not eligible for to screw up the refund, resulting in a higher fee and letting you pay more money back when you hear from the IRS later. And make sure that any direct deposit refund goes into your own bank account instead of the taxpayer’s.
Be careful after submitting your return. The IRS will not email or call you requesting personal or banking information until you can receive your refund. See the IRS Tax Fraud Alerts page to keep up with the latest schemes.