A Professional With a Tax Preparer License Is Superior Choice for Most Returns

March 29, 2012 by  Filed under: Taxes 

Taxpayers who are not in a hurry to complete tax returns immediately after receiving their W-2s present a challenge for tax professionals. Some individuals wait until late March and early April to file with the IRS. A tax preparation service is not only trying to capture these potential clients by competing with other holders of a tax preparer license; further competition exists from the option of self-prepared returns by the taxpayers.

The availability of low-cost and sometimes free tax preparation software tempts many individuals to save money by completing their own tax returns. This is an acceptable option for people with basic deductions that are unchanged each year with no requirement for evaluation of tax credits. However, the need to apply any tax rules should inspire taxpayers to consider hiring someone who has passed the tax preparer examination.

People who file their tax returns close to April 15 should consider the decisions made by many of the individuals who file early in the year. A large number of early filers are eager to obtain refunds that are primarily a consequence of tax credit calculations. They turn to professionals with tax preparer training to calculate all the available credits and complete the correct forms. Plenty of late filers also need to capture the advantages of tax pros possessing ability to determine new opportunities for deductions and credits.

Taxpayers with business interests or rental properties or extensive investments are certain to benefit from using a tax professional. Changes in tax law occur frequently. Plus, the IRS commonly alters the rules for eligibility or record keeping concerning certain deductions. Keeping track of depreciation alone is often worth the cost of a Registered Tax Return Preparer.

In addition, a tax pro knows how to assess an individual taxpayer’s situation and determine any potential tax deductions that are missing. Plus, the knowledge from tax preparation courses renders professionals with the ability to accurately sort information for applicable tax reporting. Although a multitude of tax forms is programmed into tax software, human expertise is required to identify the distinctive details for each form.

One important statistic for an RTRP to mention with prospective do-it-yourselfers is that the average taxpayer needed 23 hours to prepare a 2010 tax return. That increased to 32 hours in cases with a business proprietorship or rental property. Because of the complexity of the Tax Code, more than 60 percent of Americans hire professionals to complete their tax returns. The IRS reports that about 3,500 tax law changes have been enacted since 2000.

Of particular interest is the ruling in a Tax Court case. The court’s decision pointed out that IRS instructions are often complicated and added that taxpayers cannot rely upon these instructions when filing a tax return. Consequently, individuals who find themselves in unfamiliar tax territory should seek professional assistance. That decision will usually create an edge that averts costly mistakes.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

Fast Forward Academy is a leading publisher of education for tax preparer license and tax professionals. Access to free questions for the tax preparer examination is available on their website.

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