At this point in the year, you’ll have more than enough blogs to read regarding your 2016 tax return. Sure, you’ll hear how you need to be organized or how to choose a tax preparer. You’ll also hear how to get a bigger refund and how to not stress out. I’m sure they’ll all be of value to you.
Here are some dirty secrets of the tax business. You didn’t hear them from me!
Confession #1: Some tax preparers should be called “number inputters”
Anyone can drop numbers into a box and follow directions. The reason you pay your accountant is to be aggressive. He should have a deep client base and industry experience to draw from. Having these assets will help him know what the IRS is focusing on in order to steer you away from some high-risk deductions. Please note, being aggressive means doing anything illegal. What I do support is an accountant who knows where the grey areas of the tax code sit. In short, don’t pay someone to copy your numbers into a tax program and hand you a printout.
Confession #2: You’re paying unnecessary interest and penalties
People who prepare tax returns as a side job are not as knowledgeable in the field (This type of person is normally found at a national tax franchise location.) If your preparer isn’t talking to you all year or thinking about topics such as making quarterly tax payments, you may be paying some interest and penalties that are easily avoided. This is more common for self-employed individuals, as they don’t have an employer to withhold money for them.
Also, if you handed your accountant your tax information more than 2 weeks before the deadline, it SHOULD be filed on time. If not, they should inform you that you’ll be going on extension. If one of these does not happen, you’re most likely paying unnecessary penalties and/or interest.
Confession #3: You are paying too much for your return
How much should a return cost? That’s a good question: the answer is arbitrary. Here is a guide to tax return prices.
National Franchises – They will overcharge you because of all their overhead. They are training people to prepare returns who have never done so, paying rent in prime location, etc. Though some of these entities prepare a simple return for free, it’s rare anyone out of college will fall into this category. Otherwise, a couple hundred dollars is standard.
CPA firm – This type of environment will cost you a pretty penny. If price is not a concern, you will get top-notch expertise at these offices. That being said, you’ll be paying at least $300 for a basic return, going upwards from there. Most of the time, their individual return preparation is a courtesy to the business returns they prepare.
Ideal preparer – The ideal place to prepare your return, is a one- or two-man shop where the owner or head accountant used to work for the tax side of a CPA firm. Normally, someone doing it out of their home will be more negotiable with price, since their only investment in the business is time. These types of folks will have more time to talk to you and focus on your specific situation.
Good luck and I hope these confessions helped! We want to help make doing your 2016 taxes a simple process. For members, if you have any questions regarding the tax forms you received from allU.S. please contact us or come into the local branch at 1410 N. Main St. in Salinas.
Info. for this blog was received from Eric Estevez of Jiu-Jitsu Finance. This blog focuses on money issues for Millennials, whether for personal or business.