Finding the perfect accountant to prepare your personal taxes is sometimes like a job itself. You know you want to find someone who is qualified, but what does that mean? When searching for a professional to prepare your personal taxes, make sure to keep in mind these last-minute tax tips.
Know Your Situation
Has your status changed? If you are a student, you got married, or you purchased a house in 2018, you have deductions to take advantage of when filing your tax returns. As a student, you probably have some debt accumulated, and when you file your taxes, you can deduct up to $2500 in interest each year that you have accrued while holding your loan, even if you are getting help paying it off. The income cap is $80K if you are filing with a single status and $160K if you are filing jointly. If you got married, its going to be important to run the numbers both ways. Joint filing can help, but it depends on your combined income levels. If you can save more, it might make sense to file separately instead.
As recommended by Brittany Turner, CPA, founder of Countless, there are several tax deductions and credits that are available to help mitigate any negative changes to your personal refunds that might be caused by the new tax laws in place. According to CNBC, “Refunds dropped 8.7 percent over the first two weeks of filing season, the Internal Revenue Service reports. The average refund this year so far has been $1,949, compared with $2,135 during the same two-week period a year ago.”
One of the changes to be aware of is a reduction in the deduction of all taxes paid to state and local entities up to $10K in total. This means that residents in some states, like New Jersey, which pays drastically higher property taxes than others, will not be able to deduct the full amount of their already paid taxes.
Choose Your Tax Professional Wisely
When finding a tax accountant, remember that you are in charge of giving them permission to access your personal and financial information. So, to be very clear, make sure you know what you are looking for in your next (and hopefully final) tax accountant. It is a relationship that is important to keep consistent and steady, as you may face the IRS at some point with an audit of your personal taxes, and you’ll want to be armed with the best advice possible. It is more important than ever to go in with some knowledge, so you can find a long-term fit. There are a number of questions you should ask when hiring someone for any other job, so don’t be shy about asking for things like credentials and a further explanation of their experience working in their respective fields. The person who is going to prepare your personal taxes is someone you need to trust. Here are several titles that you will find in the financial world, and what they actually mean for you in terms of the more detailed aspects of the services they offer.
A Certified Public Accountant (CPA) is a person who has passed an extra ethics exam along with their accountant training exam and has met other state requirements in regards to continuing education. There are a range of professions that a CPA can practice, including financial planning and auditing. This means that they can act in several roles, and this is good if you have a diverse set of financial goals and interests beyond finding someone to simply prepare your personal taxes.
An Enrolled Agent (EA) has completed a regular three year set of continuing education credits along with their federally-granted tax license, which gives them a specific focus on taxes as a field. This may seem like an obvious first choice as someone to hire, but if you are also planning to invest, whether it is in land, the stock market, or a business idea, your personal taxes are the key to more. Therefore, working with someone who can grow with you from your single filing status to married and from renter to owner is key. If you are more of a short-term planning person, an EA might just be your best bet for the 2019 tax season.
A Certified Financial Planner (CFP) can help you plan for your financial future. This is someone who has tax experience when it comes to their examinations, however, they may not necessarily focus on taxes for their business. They have passed several exams and been approved through the Certified Financial Planner Board of Standards. They can still potentially be a good fit, but it is important to ask enough specific questions of any of these certified financial industry-based individuals.
An extra certification you can ask for when finding a tax accountant is the Annual Filing Season Program (AFSP), which serves as a refresher course for tax agents to learn about new regulations and changes to the tax codes and laws. Agents who have been registered through this program can be found on their database. Choosing someone who is trained specifically for your needs is best, especially because your personal tax record is yet another sign of trustworthiness for future financial endeavors. Be sure that you can contact your personal tax agent during offseason and go over your plan for an audit should that situation arise.
Familiarize Yourself with New Tax Info
Heard the latest? We also have, reporting from Forbes, the fact that Commissioner Chuck Rettig has reached out with a message for all taxpayers. The video link explains his message in full. But in short, the most important part is that if a taxpayer can’t afford to pay his or her 2019 tax bill in full and on time, it is still best to go ahead and file anyway rather than risk facing the levied penalties. There are payment options available, and one can also file for extensions. Rettig has also stated that the IRS is willing to help taxpayers figure out their best payment options and work with them to avoid heavy penalties that are strictly enforced. For those of us who have relied on our usual numbers, it’s definitely important to get a clear picture of what resources are and are not available to you now that we are in a new year.
Ready to get started? This 2019 tax season try to keep it simple. Do your research, ask questions, and make sure you are fully prepared to hand over all the information your financial agent will need to file your personal taxes properly for you. Remember these last-minute tax tips when you open your laptop or pick up your phone, and you will be much more confident and prepared to “pay your dues” to America.