Most Americans hire professionals to prepare their tax returns. However, many people are not sure whether they should pay someone to prepare their taxes or do it themselves. Of course, preparing taxes is a difficult task so using a professional tax service is always a good decision. In this article, we will consider the benefits of tax preparation services in more detail and share some helpful tips on how to choose a good tax preparation service near you.
Benefits of Using Tax Preparation Services
First, people often choose online tax preparation services because in January 2023, this option is cheaper than hiring a tax professional. At the same time, hiring a tax professional can be a better solution if you want to save more money on your tax return. A good tax professional knows all the rules and understands your situation so they may suggest some credits and deductions that you may not be aware of. Moreover, if you consider how many hours tax preparation takes, you may realize that the cost of hiring a tax professional isn’t that high.
The whole process of preparing your taxes can take about 20 hours. This process includes organizing your files and forms, completing, and submitting your returns. However, if you decide that you don’t need any help with preparing your taxes, you may also spend a lot of time double-checking everything and making sure that you’ve done everything correctly. If you delegate tax preparation to professionals, this process will take less time, and you’ll also be able to avoid a lot of stress.
When it comes to taxes, it’s important to stay up to date about all the laws and regulations. And, these things may change frequently. By hiring tax professionals, you can eliminate possible errors so you’ll less likely become subject to an audit. Although audits are rather uncommon if the IRS decides to audit you, having a tax professional by your side will help you make sure that you’ll provide a timely and appropriate response to all IRS inquiries.
Perhaps the main reason why people hire tax professionals and use tax preparation services is that they want to avoid unnecessary stress. If you have a tax professional who knows you and your tax situation, the tax preparation process will take less time every year. Besides, working with professionals is always a better solution if you want to make sure that your taxes are calculated and filed properly. When students need professional editing and proofreading for their academic papers, they look for top writing websites. Nothing should stop you from following the same approach when preparing your taxes. You just need to know reliable tax preparation services.
Tax Preparers vs. CPAs
You can hire a certified public accountant (CPA) to prepare your taxes, but you should keep in mind that not all CPAs can do it. Similarly, not all tax preparers are CPAs. Choosing a CPA isn’t a necessity. However, you must figure out what services you will need. For example, a tax preparer might also review your records to evaluate taxes, perform data entry tasks, choose, and set up accounting software.
Both CPAs and tax preparers can be specialists or generalists. You should choose professionals based on your goals and keep in mind that if someone tells you that they know everything about taxes and there is no one who would do a better job, it’s always a red flag.
What Enrolled Agents Do
Enrolled agents (EA) have at least five years of experience working for the IRS or have passed a standardized test dedicated to all the details of the tax code. EAs also need to have 72 hours of continuing education every three years, which means at least 16 hours every year. Besides, enrolled agents need to take an ethics course, just like CPAs. However, there is a big difference between CPAs and EAs.
CPAs can take different courses, including those that focus on technology, management, accounting, and personal development. In contrast, EAs take courses that focus exclusively on federal taxation. Therefore, an EA might know more information about taxation. However, if a CPA stays up to date about taxes intentionally, such a professional might be more competent.
How to Choose a Tax Preparer Near You
Know tax preparer qualifications
The data from the Better Business Bureau (BBB) shows that as of January 28, 2023 there are at least 700,000 tax preparers with no credentials in the U.S. In some states, tax preparers don’t need to get a license or pass an exam. Although some non-credentialed tax specialists are experienced professionals who know a lot about their profession, you should keep in mind that tax preparers with the necessary qualifications offer a number of benefits. No matter how good a non-credentialed tax preparer is, their presentation rights are limited so they won’t be able to represent you in court.
Enrolled agents have a license from the IRS. They need to complete 72 hours of training, pass a complex exam that includes three parts, and prove their knowledge of tax regulations and accounting methods. The IRS license enables EAs to represent taxpayers in court. CPAs have college degrees in accounting and need to pass the Uniform CPA exam to obtain their license.
You may also hire a tax attorney. Such professionals are usually licensed by state courts. Tax attorneys have a law degree, and they may specialize in tax planning and tax preparation. To search for a tax preparer with specific qualifications, you can use the IRS directory of tax return preparers and select the qualifications you’re interested in.
Check the Preparer Tax Identification Number (PTIN)
When talking to a tax preparer, make sure to ask them for their Preparer Tax Identification Number. Anyone who prepares federal tax returns or assists in preparation is required to have a PTIN from the IRS. However, this requirement only applies to those who prepare taxes for compensation. If you’re dealing with a volunteer tax preparer, they may not have a PTIN because this requirement doesn’t apply to them. Keep in mind that the IRS also requires tax preparers to put their PTIN on your return.
Check the enrolled agent designation, CPA, or law license
Although checking a PTIN will help you avoid unprofessional tax preparers, you should also keep in mind that a PTIN is relatively easy to obtain. Therefore, if you’re looking for the best professional, a good solution is to also check other documents and hire a credentialed preparer, who might be an enrolled agent, CPA, or licensed attorney. You may also find a tax preparer who completed the Annual Filing Season program from the IRS.
To meet the requirements of the Annual Filing Season program, professionals should complete such programs as the Accredited Tax Preparer or the Accredited Business Accountant. Such credentials are not easy to obtain and require professionals to pass various exams and put a lot of effort into continuous education. If you check the IRS directory, you will only see preparers who have not only PTINs but also professional credentials recognized by the IRS.
Check the preparer’s history
If you want to avoid any risks and make sure that your tax preparer can be trusted, you should check their history. This way, you will know exactly what to expect. The IRS recommends contacting the Better Business Bureau before choosing a tax preparer. We also recommend that you contact the necessary state agencies to clarify a tax preparer’s license status and learn about any disciplinary actions.
If you’re considering hiring a CPA, you can get the necessary information from the State Board of accountancy. When dealing with enrolled agents, you can visit the IRS website and verify their status, and you can check the directory. As for the attorneys, you can check with the State Bar Association.
Consider the preparer’s connections
Your preparer’s network can be beneficial not only for them but also for you, as well. Besides, a tax preparer’s memberships can tell you a lot about their level of professionalism. For example, a tax preparer might be a member of the National Association of Enrolled Agents, the National Association of Tax Professionals, the American Academy of Attorney CPAs, or the American Institute of Certified Public Accountants.
Such organizations have their professional conduct requirements, codes of ethics, and many kinds of certification programs. Therefore, choosing members of these organizations to prepare your taxes is always a good solution.
When choosing a tax preparer, you should also be able to choose a professional whose services will fit your budget. The cost of tax preparation services may vary. For instance, if you need to prepare a Form 1040, the average price will be $203. Many tax professionals, however, don’t charge a flat rate, and the average cost of their services is $138 per hour.
Quite often, tax preparers either have a fixed fee for each type of form or a minimum fee with the additional cost based on the complexity of your return. An average minimum fee usually ranges between $160 and $170. When dealing with preparers who charge a fixed fee based on the type of form or schedule, you should keep in mind that different fees have different prices. For instance, you may need to pay an additional $84 to file Schedule C.
You may also encounter tax preparers who will calculate their fee based on the amount of your return. We recommend that you stay away from such tax preparers, and you should also be very careful if someone promises that you will get a bigger refund than when working with other tax preparers.
Avoid tax professionals who don’t e-file
Any paid tax advisor with more than 10 returns is required to file their files in electronic format, using the IRS e-file system. First of all, the e-file system offers you the quickest way to get a refund. Secondly, if a tax preparer doesn’t offer an e-file, it means that they don’t do much tax prep work.
Review your tax return before signing it
You should always review your tax returns before signing. Just like students need to use an essay plagiarism checker before submitting their papers, you should check your tax return for any inconsistencies. If you have any doubts, don’t hesitate to ask questions. Talk to your tax preparer and clarify any details. You should be confident in the accuracy of your tax return to sign it. Don’t forget to make sure that your refund will go directly to you, not somebody else’s bank account. You should also get a copy of your completed tax return from your preparer.
Report suspicious tax preparers
Finding a good tax preparer who won’t cause any trouble isn’t difficult. There are hundreds of honest and experienced tax advisors and accountants who know their job perfectly and actually help their clients. However, there are also some tax preparers who may want to take advantage of you.
If you’re dealing with tax fraud or abusive preparers, report them to the IRS by using Form 14157. If you think that your preparer changes the amount of your return without your consent, you can also report them by filing Form 14157-A. By reporting suspicious tax preparers, you can help others and protect yourself.
Top 6 Tax Preparation Services
Jackson Hewitt connects clients with tax professionals. You can find a tax preparer by visiting the company’s website, or you can visit one of 6,000 offices, many of which are located in Walmart stores. This tax preparation service is very easy to use because you can book an appointment or simply visit one of the Walmart locations while shopping for groceries and get the necessary help with your taxes. Many locations work in the evening and on weekends so you can always choose the time that works for you.
Before meeting with your tax preparer in person, you can upload all the necessary forms on the Jackson Hewitt website. The website even enables you to take a photo of a form with your phone. However, if you face any problems with uploading documents, you can visit an office near you and provide documents. After this, you can come back for a review session. The prices depend on the number of forms that you need to complete to get your return.
This is a well-known tax preparation service with reasonable prices and a huge network. This service has a good reputation because of its reliability. H&R Block offers software that can help you do your taxes alone, and it also offers full-service plans. Every year, H&R Block prepares dozens of millions of tax returns. To get the necessary assistance, you can use the company’s online service or visit one of 11,000 office locations.
When visiting office locations, you can also choose from two options. First, you can use a drop-off service. Just leave your documents at an office and then come back to sign the necessary paperwork. You can also sit in the office with a tax professional and wait until your return is completed. No matter what option you choose, prices start at $69 for basic returns, with an additional $59 per state.
This year, the company also introduced an opportunity to provide all of your tax forms online. You can attend a virtual tax preparation session and communicate with your tax preparer remotely. The number of locations, along with the variety of tax preparation services and affordable prices, makes H&R Block a great solution for those who want to get high-quality tax preparation services at a reasonable price.
Ernst & Young allows users to get a top-notch tax preparation experience by using a desktop or smartphone. EY TaxChat is a perfect solution for small business owners and self-employed professionals. Ernst & Young is a well-known company with a great reputation and many years of experience in legal consulting, taxation, and accounting. Thanks to its app, tax preparation becomes easier than ever.
By using this tax chat, you can get all your taxes prepared and filed for you. You can talk to a tax professional online and submit all the necessary documents through a secured online portal or a mobile app. The company matches clients with tax professionals based on a specific client’s tax situation so you can work with a tax preparer who has all the necessary expertise and knowledge.
The price of tax preparation starts at $199. However, be ready to pay more depending on the forms that you need to file and other details. This is a good solution for simple taxes, but business owners, sole proprietors, and landlords might choose another solution from our list.
TurboTax offers tax preparation software, and TurboTax Live is an add-on that will help you connect with a real tax professional who will do all the hard work for you. Also, TurboTax apps constantly make it to the lists of the best tax preparation software, being a great DIY option. However, not all cases are the same, and you may need help from a professional who knows more about taxes than you do. You can even start working on your tax return alone and then use TurboTax Live so that a professional can help you complete it.
TurboTax Live offers a full-service option that costs $130 to $290, depending on the complexity of tax returns. When using this service, you will also have to pay a fee for multiple forms and state taxes. If you’re already using TurboTax software, you can upgrade for $100-$260, depending on the complexity of your case. The software itself costs up to $120, with a free trial package. This is a 100% online solution so it will be appreciated by people who love technology. However, this service doesn’t offer a drop-off option.
Taxpayers with low income can also use the volunteer income tax assistance (VITA) from the IRS, and seniors can use the tax counseling for the elderly (TCE) program. These are the best solutions for low-income citizens because these services are run by local volunteers and are absolutely free. VITA has already existed for 50 years. This program helps people who make $56,000 or less, people with disabilities, and people with poor English skills. TCE focuses on clients aged 60 or older.
All volunteers from VITA and TCE programs go through extensive training and pass an evaluation that corresponds to the IRS standards, so these programs provide high-quality services. Every return prepared within these programs passes review checks before it’s filed. To find a local office where you can meet a VITA or TCE professional, you can use this location tool from the IRS. Keep in mind that, given that these services are free, you might need to wait until you’re able to schedule an appointment.
If you have a young and growing business, your needs might differ from those of other individuals. KPMG Spark is a great service intended for small and mid-size businesses and entrepreneurs who want to get tax assistance from experienced business experts. This is a well-known company that provides an online tax experience and works with many Fortune 500 companies. Therefore, small businesses can benefit from the experience of professionals who work with well-established companies.
KPMG Spark offers full-service options. Business owners can use professional bookkeeping services to streamline the tax preparation process. The online portal works 24/7, and the price is $195 per month, with no additional fees. If you choose a full-service experience, you should contact the company to learn the price of your tax return that will be calculated depending on its complexity.
TFX is a women-owned tax firm that offers all U.S. tax services — for both American citizens and non-citizens with U.S. investments or real estate. From straightforward tax preparation to complex cases involving multiple factors — they’ve handled it all. That’s why TFX is the top-rated tax preparation service for Americans in the U.S. and abroad.
Why choose TFX? They have 80+ experts with years of experience. Filing your own taxes might be overwhelming. With their team of specialists, you’ll never have to worry if you will make any mistakes, but you’ll also save a lot of money as their CPAs know all the nuances of the US tax code.
To get started, the process is simple: all you need to do is to complete their Tax Questionnaire so that they can understand your unique situation and prepare your return optimally. All your data is completely secure within their system with 2-Factor Authentication.
If you have not filed in years, TFX can help you get into compliance penalty-free through the Streamlined Procedure program.
Tax preparation is a complex process, so the best solution is to hire a tax professional who will prepare your taxes for you. Depending on your needs, you may choose a certified public accountant, enrolled agent, or tax attorney. There are many reliable nationwide tax preparation services, and you can always find an office near you. Moreover, many companies from this niche allow you to prepare your taxes online, communicating with tax professionals remotely.