Services: Taxes

More than half of Angie’s List members will file their tax returns this year themselves, according to a recent nationwide poll.

Generally speaking, taxpayers with simple tax situations can file their own tax returns with a minimum of stress. But these days with health savings accounts, child care savings accounts and a multitude of tax deductions, few homeowners would define their tax situation as “simple”. For those with multiple sources of income, especially if they’ve had jobs in different states or counties, it just gets more complex.

“Nearly one in five of our members said they have made at least one mistake when doing their own taxes,” said Angie Hicks, founder of Angie’s List (www.angieslist.com), the nation’s leading provider of consumer ratings on local service providers, including accountants and tax consultants.

According to the Angie’s List poll, 48 percent of the respondents will hire a tax professional.

“Many tax payers just don’t know enough about their own situation or the many complex tax laws to cover all the bases,” Hicks added. “Nearly 30 percent of members said they are unsure if they will receive a refund this year or owe taxes to the IRS. Rather than take a gamble that might end up costing more in the long run, it’s best to invest in a professional who knows the tax laws and can maximize your refund, while also minimizing the amount you owe.”

Angie’s List contacted its highly rated tax consultants for advice on common filing mistakes and the one of the common mistakes was filers not taking the time to review their return after completing it and therefore, potentially missing income or deduction items. Another common error is often people simply forgetting to sign their return.

“Tax consultants also say you should file your taxes as soon as possible,” Hicks said. “If you owe money to the IRS, it’s good to know how much and to budget for paying it by the April 15 deadline. The IRS can penalize a taxpayer for not filing and for not paying on time. If you cannot pay, contact the IRS to arrange an installment agreement so you can pay over time.”

Here are some of the common types of preparers:

• Tax preparer from chain or local outlets: They usually show up in rented storefronts along tax time. If your return is a relatively simple one, this could be a good, inexpensive option.
• Enrolled Agent: They are licensed by the federal government, which means they have passed an IRS exam, background check and they complete continuing education requirements every year.
• CPA: They must undergo rigorous training. Not all handle tax matters, so be sure to check first.
• Tax Attorney: May be a good choice if you have a highly complex situation, own a small business, or need guidance completing your return.

Angie’s List’s Tips for Hiring an Accountant or Tax Consultant:

• Hire help or go alone? It’s probably a good idea for most people with simple tax situations to prepare their own returns. However, for those with more complex situations, calling a professional is a better idea. Also, you might consider having the same person prepare your taxes every year. As with most relationships, the longer you work together with someone, the more familiar they become with your needs -- and the more likely they are to do a great job for you.
• Check credentials: Ask the preparer about his/her training. Will they represent you in case of an audit? Only enrolled agents, CPA’s and tax attorneys can represent taxpayers before the IRS in all matters including audits, collection auctions and appeals. Will you be able to contact them after the return is filed? Reputable tax preparers will ask to see receipts and will ask multiple questions to determine whether expenses, deductions and other items quality. By doing so, they are trying to help their clients avoid penalties, interest or additional taxes.
• Ask for an estimate: There is a wide range of tax preparers with varying fees, so know up front what you’re paying for. Beware of preparers who claim they can obtain larger refunds than other preparers. Fees generally range from $50-$1,000 and are usually determined by an hourly rate.
• Get references: Ask questions from clients who have used the tax preparer before. Were they satisfied with their service?
• Do your research: Check Angie’s List for recommendations on tax pros. Check with the IRS at www.irs.gov about tax schemes and scams.
• Get organized: Compile all your documents and make an appointment early with your preparer. Bring with you a copy of last year’s return. Make a list of questions you want to ask the preparer. Make an appointment. You have a better chance getting in mid-to-late February. March and April is a tough time.
• Check your return: Although the preparer signs the return, you are responsible for the accuracy of every item. Read it carefully and ask the preparer for a copy of the return.

        *1,080 Angie’s List members took our poll. Responses are representative of Angie’s List members, but not the general public.

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