Tax Prep Could Be More Expensive This Year. How Experts Say You Can Save and Still Maximize Your Return
Tax season costs quickly add up – on top of any taxes you might owe, tax prep can be costly and time-consuming.
And that’s before you add in the challenges of another unconventional tax season this year, with experts warning many American taxpayers to expect delays and filing complications when they file.
Many tax preparers may charge more this year to account for tax changes in response http://worldpaydayloans.com/payday-loans-wy/ to the pandemic and compliance responsibilities, says Michele Cagan, CPA, founder of Single Mom CPA and author of Debt 101.
Depending on how complex your return is, you may also need to decide between filing yourself using online tax software or working with a tax professional. Either way, the costs can add up quickly.
Fortunately, there are a few ways that you can save money on your taxes without missing out on any credits or tax breaks you may qualify for. Here are a few expert tips to help you spend less time and money on filing this year, and some resources to help you get started filing your return before the April 18 deadline.
Organize Your Tax Documents Ahead of Time
You can save time and money by doing some of the prep yourself. Cagan says tax preparers’ rates sometimes depend on how much work and time it takes to figure out your expenses, earnings, and other tax information. If a tax preparer has to sort through piles of documents, the charge will likely be more.
It’s best to organize your documents by category – such as your children or other dependents, business expenses, and retirement and investment accounts – before you meet or share your documents. You may also want to separate your income, expenses, and receipts for credits for your tax preparer to find quickly.
Create an IRS account before preparing your taxes, which has all of the information that third parties, including employers, have sent to the IRS about money you earned. This information can help you accurately prepare your return and reduce errors that you may otherwise have to pay for tax preparers to correct.
Figure Out What Type of Tax Prep You Need
Differently-certified tax preparers may charge varying prices for their services. There are generally two types of preparers you’ll see most often: EAs and CPAs. An enrolled agent (EA) is an IRS-authorized tax professional who focuses on tax filing, audits, and appeals. A certified public accountant (CPA) is state-licensed and can assist with a broader range of financial topics – including accounting, financial planning, and tax prep.
Both can give advice, review your documents, and file your tax return, says Joshua Giminez, CPA, founder of Fair Winds Tax & Financial in Columbus, Ohio. But EAs can be more affordable, and if you have a problem with your return, an EA can review your tax return thoroughly for errors, and keep an eye out for tax law changes. A CPA can also review your return, but is better equipped to work with you long-term on tax planning. They can help with financial planning, tax deductions, and accounting details.
If you’re not sure how to find a tax pro in your area, databases like the IRS Directory of Federal Tax Return Preparers, as well as IRS-partnered professional organizations like the National Association of Enrolled Agents or the American Institute of CPAs, can help you find licensed professionals, and you can sort by specialty. And if you’re using tax software and want to upgrade to its tax professional services, pricing is typically determined based on how much assistance you’re looking for – rather than specifically choosing an EA or CPA.