By Justin Smith
For the Opelika Observer
The Internal Revenue Service (IRS) began accepting and processing tax returns on Monday, Jan. 28, and the deadline for filing without an extension is Monday, April 15. The fastest method of obtaining your refund in 21 days or less is to e-file your return with a direct deposit. The IRS will continue to accept paper returns (even if hand written) and send refunds in the mail, but you may be waiting months for that.
Now is the time to decided how to prepare your tax returns if you have not already done so. Will you use an online preparation software or engage a paid prepare, and what are the benefits and drawbacks of each?
Do-it-yourself tax preparation software is widely available, reasonably priced and often sufficient for less complex tax returns. Software is also typically user-friendly and will serve to help you prepare and electronically file a tax return that complies with relevant federal and state tax laws.
Professional tax preparers such as Certified Public Accountants (CPAs) are accounting professionals who typically possess at least an undergraduate degree (and often a graduate degree) in accounting or a related field, have studied for and passed the extremely rigorous CPA exam and have significant experience in the field. Most importantly, CPAs will generally work with you year after year so they will better understand your unique tax situation and be in a great position to help you prepare for the future, rather than simply file a tax return.
Enrolled Agents (EAs) are also professional tax preparers who have passed the EA examination and are recognized by the IRS. EAs typically focus on tax preparation.
The benefit of hiring a tax professional as opposed to using a software solution comes down to three key considerations: convenience, complexity and planning. Tax professionals can make your filing experience much more convenient by efficiently preparing your tax return, helping you understand tax planning consideration and be better prepared for future changes, and addressing complicated issues that you may be unsure of.
I often advise taxpayers that using tax software vs. hiring a professional has nothing to do with income, and everything to do with complexity. Many taxpayers find they no longer want to pursue the do-it- yourself route if they purchase a home, start a small business, invest in rental real estate, get married, have children, buy and sell stock, live in one state and work in another, and when they encounter a large tax bill after experiencing a combination of these items.
If you are ready to hire a tax professional, consider a number of important items: qualifications, reputation, fees, experience, customer services, trust, and overall fit.
Each situation and taxpayer are completely unique, so avoid “one size fits all” services, and do your homework before selecting a tax preparer or going it alone.
Justin Smith is a licensed Certified Public Accountant in Opelika, specializing in individual and small business tax and accounting. He can be contacted at 251-209-2579 or Justin@JSmithCPA.net. His website is www.jsmithcpa.net.
