Finding a Tax Expert
December 28, 2009
Why Hire a Pro?
Do you know what AMT means (we do!)? Are you subject to it? Do you know how to claim your charitable donations? Did you “forget” to go to accounting class (we know, you were busy studying anatomy back at the dorm)? If you don’t know what any of this means, you’re not alone. Really. Those pencil pushers at the IRS seem to take particular delight in creating draconian rules to trip us up. The average person takes 33 hours to complete their taxes on their own, and 43 hours when using tax software. That seems like a whole lot of missed TV if you ask us. And we won’t tell anyone that you were watching Jerry Springer and American Idol…really.
Maybe you gave it the old college try. Maybe not. With tax code becoming more and more complicated, it makes sense to leave tax preparation to the pros. Besides, it’s the best way to not get audited…
Choices, choices…
Okay, so you’re going to do the smart thing and hire a pro to do your taxes. Great. So who do you hire? Glad you asked! There are many things to consider when finding the right person to do your taxes (It’s not unlike dating. Although you rarely want to take home your accountant).
- How complex are your taxes? We’d all like to be big shots here, but be honest. How much expertise do you need?
- Do you do anything outside of the norm? Are you a budding Donald Trump (we sincerely hope not, or we may have to fire you)? Are you taking care of granny? Are you granny? Depending on your occupation and other factors, it may make sense to find someone with specific knowledge of your occupation.
- Are you a short term, no commitments kind of guy, or do you want long term financial planning?
- Do you need someone to hold your hand? Trust us; it’s no bad thing. Some tax pros will help you later on if the IRS decides to pick on you.
EA, CPA, CFP, ATP, ATA, CIA, FBI, NSA…
Okay, so you’ve got so many affiliations swirling around your head that your brain feels like a bowl of alphabet soup. What does it all mean?
EA- Enrolled Agents specialize in taxes. We’re talking live, breathe, and think taxes so you don’t have to. They have to take a tough IRS exam, get a background check to make sure they’re not sketchy, and engage in continuing education to retain their certification. And we don’t mean continuing education like that conference you went to in Vegas…but we won’t tell what happened, if you don’t. Oh, and they’ll also go to bat for you in front of the IRS if you win the audit lottery. And you thought the lottery always ended in a jackpot…
CPA-Certified Public Accountants are college graduates who have passed a difficult exam. They’re great for preparing financial statements and maintaining business records. Because let’s be honest, a bunch of receipts thrown into a desk doesn’t really count as “records”. At the same time, CPAs may be uniquely able to help you with your taxes if they also prepare the rest of your records throughout the course of the year. Oh, and like EAs, they can go to bat for you in front of the scary IRS audit folks.
CFP- For Certified Financial PLanners, it’s all about the big picture. They’ll handle your investments and ask you the questions that nobody else seems to care about asking you. Where do you see yourself in ten years? And we mean financially speaking, not your dream of being in an Ace of Base cover band. Although we suppose they could help you plan for that, too. Those wily folks at the IRS and in Congress continuously change tax law, which is a good reason to periodically review your tax planning strategies with regards to IRAs, trusts, investments, etc.
ATP- Accredited Tax Preparers are required to have three years of tax experience before they can sit for the exam to become accredited. This experience may be comprised of two years of college education in taxes and one tax season as a preparer. A passing grade for the exam is a 70, and it includes testing the preparer's knowledge in terms of individual tax returns, comprehensive 1040 issues, and ethics.
ATA- The American Taxation Association is a national organization that is a section of the American Accounting Association. The organization is comprised of tax accounting professors, tax practice professionals, tax lawyers, and government economists. The organization is mainly tasked with educating and informing professionals of new information in the field of taxation.
What’s wrong with those block heads down in the strip mall?
If I walked in off the street, took a crash course in taxes, and passed a little exam, would you want me to do your taxes? Hmm when we put it that way, probably not. So why go to those pop up tax preparation services?! Most of the tax preparers who work at these places don’t have any of the certifications mentioned above, so their knowledge and experience is questionable at best. It’s the financial equivalent of leaving your newborn with the guy cradling a brown paper bag with a bottle sticking out the top.
