Taxes. Even the word in and of itself induces a heavy sigh from most.
Laura Steenwyk, CPA, CGMA, MST, with Rehmann, notes some people enjoy a good challenge; for those people, preparing a tax return can be as satisfying as completing a 5,000-piece puzzle. Steenwyk may be one of those people.
Others, she adds, may find the task unnerving and daunting—"creating anxiety and hot flashes."
As tax season creeps up on us, it's time to get all your ducks in a row. Wouldn't it be far easier, and less stressful, to pay someone to do your taxes for you? What are the benefits of hiring a tax professional? And is that the right fit for you?
Let's dive in.
Hiring a tax professional comes with many benefits, such as knowing you're provided with peace of mind and a framework for the future. They may identify errors in past returns and assist in correcting them, Steenwyk notes, which may result in a possible refund.
"Professionals can also provide suggestions for minimizing taxes in the future, such as maximizing retirement plan contributions, establishing charitable donor advised funds, timing of declaring social security income, or taking advantage of tax law changes."
Tax professionals can also advise on setting up new businesses, implications of business growth, or strategies for selling a business.
The more complicated your situation, the more research you should do regarding who you hire.
Not all tax returns are complex. But some are—and those situations deserve seasoned professionals. "Keep in mind," Steenwyk said, "it will likely be more expensive to administer, with fees being either hourly or fixed, based on a quote. Conducting interviews with a few professionals can help match the level of expertise needed with a palatable price point."
Things to consider:
- Talk to your friends and get a referral. Your mortgage lender, local banker and insurance agent are also good referral sources. Look for a tax professional who's a certified public accountant (CPA) or enrolled agent—individuals authorized to represent you in front of the Internal Revenue Service (IRS). Verify their license online at michigan.gov/licenselookup.
- Conduct an interview. Ask questions! What are the fees? Is there an hourly rate or a fixed fee quote? What's their experience level? Do they have any specialties? Being willing to share your prior year's tax return during the discussion is helpful. Be sure to mention any special circumstances—marriage, divorce, inheritance, kids in college, being an entrepreneur, et cetera—and bring a trusted advisor with you to the meeting.
- Give it time. Planning and advising work best when parties give each other time to digest information and create relationships. Tax professionals are busiest between January 1 and April 15, the tax filing deadline. For the best results, start conversations in January or February, rather than on April 1.
What kind of services should you expect once you hire someone?
Steenwyk notes services can be wide-ranging, from electronic preparation of a simple tax return to structuring complex merger and acquisitions.
"Some tax professionals are integrated with a firm that also provides financial consulting, technology assistance, bookkeeping services, controller-for-hire, tax credit consulting, or business-expansion consulting." Ancillary services such as these should be part of the conversation you have while interviewing your potential tax professional.
"You may not need them today, but when you do—you're ready."
When the IRS comes knocking, tax professionals have your back.
Tax professionals licensed to represent you in front of the IRS—such as CPAs, enrolled agents or tax attorneys—can help in the case of an audit.
"We help taxpayers understand their rights during an audit, can communicate with the IRS throughout the process, and can help negotiate to resolution," said Steenwyk.
As the demands of life change over time, your professional tax advice should keep pace and propel you where you want to go.
Written by Sarah Suydam, Staff Writer for West Michigan Woman.