22 Feb You or an accountant? Prepping for tax time
Q. How can I decide if I need someone else to do my tax returns?
— Ready to file
A. As you start to gather all your documents to prepare your tax returns, this is the perfect time to ask.
It all has to do with your personal situation and how comfortable you are with the tax law, its quirks and the forms you’d need to complete.
If your tax returns are not too complex, then you may be able to do your tax returns on your own, said Patricia Daquila, a certified public accountant with Lassus Wherley in New Providence.
“If you have a W-2 and not too many other sources of income or deductions, then it is possible,” Daquila said. “However, there are many complexities in the income tax law may benefit you to have a tax professional prepare your returns.”
Daquila said there are several factors that you should consider.
The first factor is your knowledge of the current tax law?
A tax professional such as a Certified Public Accountant (CPA) is licensed and certified by the state, Daquila said. CPAs must have a college degree and pass a national exam.
In addition, they need to complete continuing professional education (CPE) to keep their license active, she said. Specifically in New Jersey, a CPA has to complete 120 hours of CPE every three years to renew their license.
“A CPA who specializes in tax preparation is experienced and should know the current tax laws,” she said. “A CPA can prepare your returns accurately and take advantage of deductions and credits of which you may not be aware.”
The second factor is time.
Do you have the time to not only gather all of your tax information, but then assemble it, prepare your tax returns, and review them?
The third factor is technology. Are you knowledgeable about using a computer?
“There are many computer software programs that are on the market to aid in the preparation of your tax return,” she said. “However, you would need to know how to install the program and input the information.”
You would also need to review your tax returns after they are completed, Daquila said, noting that most tax professionals now electronically transmit their tax returns to the IRS, resulting in quicker refunds of overpayments.
The fourth factor is the cost. Do you have the money to pay a professional to prepare your tax return?
“The cost can vary based on the professional that you hire,” she said. “It is always recommended to ask for an estimate before engaging a professional.”
In the end, Daquila said, ask yourself this question: “If you had a pipe break in your home, would you fix the pipe yourself or would you hire a professional plumber?”
A tax professional is trained, experienced and licensed in the area of taxation, she said.
Good luck in making your decision whether or not to prepare your own tax returns.
Email your questions to moc.p1563411011leHye1563411011noMJN1563411011@ksA1563411011.
This post was first published in February 2017.NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.