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Tax Preparation Done Right 5 Things You Need To Know

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Tax Preparation Done Right 5 Things You Need To Know

Tax Preparation Done Right 5 Things You Need To Know

The following are some items that you should take into consideration regarding the preparation of your personal tax returns.  Remember, if you hire a tax professional, you are not paying them to just fill out the forms. You are paying them to offer guidance, look for previous problematic or audit situations and ultimately pay the least amount of tax legally possible.   Take the time to find the best tax professional. Treat them as if they were your investment advisor. They should make you money compared to other alternatives. 

 Do you have the time to prepare your own returns?  If you look at the instructions for the Form 1040, it indicates that an average person will need 22 hours to prepare a return.  This figure increases as you add additional forms and schedules.  So if the average return requires 32 hours of time, what is your time worth to you?  A good tax professional has systems in place to efficiently and effectively prepare the returns.

Does it make sense to hire someone to prepare your returns?  A good tax professional will have worksheets specific to the activities on your return.  They will also offer a checklist and organizer designed to efficiently gather the information to properly prepare your return.  It does not have to be a painful event, each year, to prepare your return.  A good tax professional should also offer you guidance on structuring for future years to take advantage of the laws.

 

Do you understand the complexity of the tax code?  The question is, do you have a complete understanding of the complexities of the US Tax Code, to squeeze out every deduction legally allowable under the law? There have been over 3500 tax law changes since 2000 alone.

 

Will hiring someone who specializes in taxes, save you money?  A good tax professional will know the questions to ask to arrive at the lowest tax possible.  They should ask specific questions based on the activities on your return.  These questions should be designed to look for every deduction possible.  The average person doesn’t have the time to keep up with the changes in the law, nor to understand the potential deductable items.

 

What should you know when hiring a tax professional?  Not all preparers are created the same.  Currently, there is still no license, degree or education requirement, to a prepare return for the general public.  The IRS is trying to change this fact and I applaud their efforts.    Preparers come in four basic categories; 1) unlicensed, unregistered preparers, 2) Registered return preparers, 3) CPAs and Enrolled Agents and 4) Tax Attorneys.   You will want to ask how much of the firm’s billable hours are spent on tax preparation, each year.   This will tell you if tax preparation is seasonal or the main focus of the firm.  You will also want to know how much of the tax work is done by temporary seasonally hired employees.   

Independent Foreclosure Review Payments – Taxable or Not

Unfair Assessments Could Await Those You Who Do Not File Returns

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