Post by ccoyle78 on Nov 2, 2017 18:59:04 GMT -6
I tell everyone that unless you can prepare a complete tax return on paper, you need to hire a preparer. I have many reasons why:
1.) The “Box” is not going to tell you if you made a mistake. This is my #1 reason why a paid preparer is better. A competent (more on that word later) preparer has the knowledge and training to enter the information correctly. The “Box” has a lot of yes or no questions. If you click a no that should be a yes it will take you down a whole different road of questions all together. Inventory is a big issue with the small crafting industry. If it is not correct, the repercussions can be felt for years, including needing years of amendments to get it all straightened out. Finding a competent small business preparer right out of the gate can save a lot of money and time in the future.
2.) The “Box” does not know your state issues. Many states do not adopt federal regulations. The PATH ACT provisions are a great example of this. The professional software in some instances do not even catch it. Your “box” is not going to be able to look at your personal situation, ask questions, and determine the proper route to go to get you the best possible outcome not only for the current year, but plan for future years.
3.) Time. What is your time worth? Many people get the “Box”, then spend hours reading through the screens and still are confused, or guess answers. A competent preparer will ask you the questions in an easy to understand format, and know how to input your answers correctly for your situation. You also can ask your preparer questions. I spend a lot of time going over any questions a client may have about their returns. I have several clients in different states, so we do these over phone, email, FB messenger, even video chat. Once they are satisfied with all the information and all questions are answered then we sign and file.
4.) Money. The box costs anywhere from $65 to $99 for Home and Business version. That includes 1 state download. That state will cost you an additional $19.99 to e file. If you want the Protection Plan it is an additional $39.99. Don’t forget your sales taxes! This Protection Plan will only protect you from a mistake the software makes. If you make a mistake, then you are SOL. This is even true for the plans peddled at the big box prep places (many preparers are given an incentive to push the purchase of these protection plans). So now we are up to $124.98. Plus your time. My prices are $130 to start, and I do dependents returns for free. Take a good look at that fine print on that box. There are many restrictions that apply to the “free advice”.
5.) Audit Notices can come years later. Statute of limitations is 3 years, but can be up to 5 if you have omitted 20% of your income. I spend a lot of time in the summers fixing “Box” returns. Which leads back to money, because I then charge my base fee plus a time charge to prepare an answer to the notice. There are many different types of notices sent by the IRS. All of them are considered an audit of one form or another. The “Box” people will direct you to write X letter, or I have even heard in one case they told the person to just pay the monies because it’s “too hard” to deal with the IRS. When one of my clients get a notice, I first read the entire notice, then ask questions of my client to understand why the letter is being sent. Sometimes we already know, and I already advised them to look for the letter because sometimes the tax situation is too complex for the forms to accurately reflect the situation. We handle the notice in writing, or sometimes a call is needed to clarify before the letter is written. Sometimes the scope of the letter means more than a half an hour work for me, and I have to charge for my additional time.
Tax Preparation is NOT regulated by ANY government agency. There are 3 levels of accepted preparers.
1.) The Unregistered Preparer has a PTIN. They can get this by answering a few questions to the IRS and paying them the $65 fee. They are not allowed to represent clients in any audit situation. This is usually the “Big Box” prep places. They have 6 to 12 weeks of training called “tax school”. They are seasonal employees who usually make minimum wage plus a bonus based on the number of returns they complete. You can find a diamond in the rough here though. I started at a Big Box. I have some former employees of mine in SC who still work at a big box. If you want an EXCELLENT preparer in Florence, SC I can give you a name, but be prepared to pay big box prices.
2.) The ASFP Preparer is one who has completed 18 hours of Approved Continuing Education in the year. They are required to take a 6 hour refresher course that contains major law changes, and 2 hours of ethics. The other hours can be on courses of the preparers choosing. They also must renew their PTIN every year. These preparers can represent clients in audits only on returns they prepare.
3.) EA or CPA. These preparers have taken a sanctioned test to get these credentials. An EA must earn 72 credit hours in 3 years, with a minimum of 16 each year. 2 must be ethics. A CPA must have 120 hours in 3 years, with a minimum of 20 hours per year. They have to take 4 hours of ethics within those 3 years, and not more than 50% of non-technical hours total. They can represent anyone before an audit. Think of a CPA as a general Doctor. An EA is a Specialist, like a Heart Surgeon. I have CPAs as clients because they do not specialize in taxes.
Then you have all the people who are not required to have anything. These are everyone who works for VITA, and the data entry people who enter in all the information on returns at larger (and sometimes) smaller CPA firms. Many times the CPA will look at the return for 3-5 minutes and then sign it, not even inputting a single entry. You also have those who buy copies of the “Box”, put out on Craig’s list “REFUNDS FOR $50”. These returns will all say self-prepared. Military personnel need to watch out for those free filing centers they offer on base. They are staffed by volunteers who are considered trained by VITA. They have 6 weeks of training. When I was near Shaw AFB they would send the small businesses over to me and my colleagues because they could not correctly prepare the business returns, and knew it.
Yes, you need to be careful when hiring a preparer. Anyone can call themselves an accountant, or a tax preparer. Many times these terms are used interchangeably. Ask questions on inventory, gift limitations, and business use of home. If the answers are wrong, walk away. A true Small Business Tax Accountant or preparer will not tell you that you have a hobby. They will see you for what you truly are. A Business Owner. The bottom line is YOU are responsible for EVERY PIECE of information on that return, not the preparer. I started this group 3 years ago because there was a true void and need for correct information and proper tax education. The Code changes every year. A dedicated Tax Professional will do the work and pay the fees needed to stay on top of the changes. A fly by night won’t. Educate yourselves. Know your limitations. Hire a Professional.
1.) The “Box” is not going to tell you if you made a mistake. This is my #1 reason why a paid preparer is better. A competent (more on that word later) preparer has the knowledge and training to enter the information correctly. The “Box” has a lot of yes or no questions. If you click a no that should be a yes it will take you down a whole different road of questions all together. Inventory is a big issue with the small crafting industry. If it is not correct, the repercussions can be felt for years, including needing years of amendments to get it all straightened out. Finding a competent small business preparer right out of the gate can save a lot of money and time in the future.
2.) The “Box” does not know your state issues. Many states do not adopt federal regulations. The PATH ACT provisions are a great example of this. The professional software in some instances do not even catch it. Your “box” is not going to be able to look at your personal situation, ask questions, and determine the proper route to go to get you the best possible outcome not only for the current year, but plan for future years.
3.) Time. What is your time worth? Many people get the “Box”, then spend hours reading through the screens and still are confused, or guess answers. A competent preparer will ask you the questions in an easy to understand format, and know how to input your answers correctly for your situation. You also can ask your preparer questions. I spend a lot of time going over any questions a client may have about their returns. I have several clients in different states, so we do these over phone, email, FB messenger, even video chat. Once they are satisfied with all the information and all questions are answered then we sign and file.
4.) Money. The box costs anywhere from $65 to $99 for Home and Business version. That includes 1 state download. That state will cost you an additional $19.99 to e file. If you want the Protection Plan it is an additional $39.99. Don’t forget your sales taxes! This Protection Plan will only protect you from a mistake the software makes. If you make a mistake, then you are SOL. This is even true for the plans peddled at the big box prep places (many preparers are given an incentive to push the purchase of these protection plans). So now we are up to $124.98. Plus your time. My prices are $130 to start, and I do dependents returns for free. Take a good look at that fine print on that box. There are many restrictions that apply to the “free advice”.
5.) Audit Notices can come years later. Statute of limitations is 3 years, but can be up to 5 if you have omitted 20% of your income. I spend a lot of time in the summers fixing “Box” returns. Which leads back to money, because I then charge my base fee plus a time charge to prepare an answer to the notice. There are many different types of notices sent by the IRS. All of them are considered an audit of one form or another. The “Box” people will direct you to write X letter, or I have even heard in one case they told the person to just pay the monies because it’s “too hard” to deal with the IRS. When one of my clients get a notice, I first read the entire notice, then ask questions of my client to understand why the letter is being sent. Sometimes we already know, and I already advised them to look for the letter because sometimes the tax situation is too complex for the forms to accurately reflect the situation. We handle the notice in writing, or sometimes a call is needed to clarify before the letter is written. Sometimes the scope of the letter means more than a half an hour work for me, and I have to charge for my additional time.
Tax Preparation is NOT regulated by ANY government agency. There are 3 levels of accepted preparers.
1.) The Unregistered Preparer has a PTIN. They can get this by answering a few questions to the IRS and paying them the $65 fee. They are not allowed to represent clients in any audit situation. This is usually the “Big Box” prep places. They have 6 to 12 weeks of training called “tax school”. They are seasonal employees who usually make minimum wage plus a bonus based on the number of returns they complete. You can find a diamond in the rough here though. I started at a Big Box. I have some former employees of mine in SC who still work at a big box. If you want an EXCELLENT preparer in Florence, SC I can give you a name, but be prepared to pay big box prices.
2.) The ASFP Preparer is one who has completed 18 hours of Approved Continuing Education in the year. They are required to take a 6 hour refresher course that contains major law changes, and 2 hours of ethics. The other hours can be on courses of the preparers choosing. They also must renew their PTIN every year. These preparers can represent clients in audits only on returns they prepare.
3.) EA or CPA. These preparers have taken a sanctioned test to get these credentials. An EA must earn 72 credit hours in 3 years, with a minimum of 16 each year. 2 must be ethics. A CPA must have 120 hours in 3 years, with a minimum of 20 hours per year. They have to take 4 hours of ethics within those 3 years, and not more than 50% of non-technical hours total. They can represent anyone before an audit. Think of a CPA as a general Doctor. An EA is a Specialist, like a Heart Surgeon. I have CPAs as clients because they do not specialize in taxes.
Then you have all the people who are not required to have anything. These are everyone who works for VITA, and the data entry people who enter in all the information on returns at larger (and sometimes) smaller CPA firms. Many times the CPA will look at the return for 3-5 minutes and then sign it, not even inputting a single entry. You also have those who buy copies of the “Box”, put out on Craig’s list “REFUNDS FOR $50”. These returns will all say self-prepared. Military personnel need to watch out for those free filing centers they offer on base. They are staffed by volunteers who are considered trained by VITA. They have 6 weeks of training. When I was near Shaw AFB they would send the small businesses over to me and my colleagues because they could not correctly prepare the business returns, and knew it.
Yes, you need to be careful when hiring a preparer. Anyone can call themselves an accountant, or a tax preparer. Many times these terms are used interchangeably. Ask questions on inventory, gift limitations, and business use of home. If the answers are wrong, walk away. A true Small Business Tax Accountant or preparer will not tell you that you have a hobby. They will see you for what you truly are. A Business Owner. The bottom line is YOU are responsible for EVERY PIECE of information on that return, not the preparer. I started this group 3 years ago because there was a true void and need for correct information and proper tax education. The Code changes every year. A dedicated Tax Professional will do the work and pay the fees needed to stay on top of the changes. A fly by night won’t. Educate yourselves. Know your limitations. Hire a Professional.
