What is a tax preparer?
A tax preparer is a professional that is qualified to calculate, file and sign income tax returns on behalf of individuals and businesses. They can also represent the taxpayer during IRS examinations of tax returns.
Here are 5 reasons to hire a tax preparer…
- You have a small business or side hustle
If you own your own business, there are many possible tax write-offs, and a professional has the expertise to help you navigate them. Likewise, if you’re doing significant work in the gig economy, driving Uber, selling products on sites like Etsy or racing horses, for example, you might need help with your 1099s.
2. The IRS contacts you
Even if the IRS reaches out asking for something as simple as substantiation of expenses related to a car you bought, I recommends looping in a professional. It could be a seemingly benign or innocuous letter but, if you handle it incorrectly, it can turn into a big deal quickly.
You don’t, after all, want to give the IRS the wrong or irrelevant information. There’s an art to playing poker, and it’s not that you’re trying to deceive the IRS, but you don’t want to show too much of your hand. It’s not that you’re cheating. A good tax professional understands the language of the IRS.
3. You’re planning for your kids to go to college
If you have a child heading to college and you’re planning on filling out the Free Application for Federal Student Aid (FAFSA), assistance could be helpful. You want to make sure you don’t have unwanted assets or income in your child’s name, for example. That can actually hurt them for financial aid, although it might be good for tax planning. So if your child has a 529 plan or Coverdell ESA, or even if they’re a part-owner of your business, it could benefit you to hear from someone who speaks FAFSA.
4. You own a rental property
A return on a real estate investment can get tricky, and a professional can help you figure out what kinds of deductions you may be entitled to.
5. You’re self directing your retirement
Your Roth IRA or 401(k) is not limited to traditional investments in stocks, bonds and mutual funds. You can also use retirement vehicles to invest in alternatives such as bitcoin and real estate. That’s self-directing. Filing your return on these investment can get murky and it might be useful to seek help. There are generally four types of professionals who can assist you with your taxes: Registered Tax Return Preparers (RTRPs), Enrolled Agents (EAs), Certified Public Accountants (CPAs) and attorneys. Many attorneys are also CPAs but may hold a more advanced legal degree as well. When deciding whom to hire, you should consider how complicated your return is.
Here is a List of What I Need for Your Appointment…
Check out the FREE video series on my 3 Keys to Unlocking Your Financial Freedom! This video series touches on Budgets, Tackling Debt, and Ways to Increase Income TODAY! I created this series for those of you who have been hit hard by COVID-19. I want you to know there is nothing you can’t accomplish and creating a plan of action is always a great starting point.