When dealing with tax debt, seeking help from a professional can increase your chances of reaching a workable settlement with the IRS. But with several types of tax specialists available, it can be challenging to determine who you should call. Here’s what you need to know about the different types of tax service options available when you need help with an IRS issue.
A tax attorney is a lawyer who has specialized knowledge about and experience with tax laws. Some tax attorneys work with individual taxpayers, while others work for businesses small and large. You may want to consult a tax attorney if:
All tax attorneys have earned a J.D. and passed the bar exam, but some have also earned a master’s degree in taxation. Look for a lawyer with experience dealing with your specific IRS issue.
Some lawyers specialize in the tax consequences of planning your estate. In addition to helping clients prepare a will, create power of attorney documents, and plan for end-of-life care, an estate planning attorney can recommend an advantageous tax plan for your assets.
Although you can have a general practice attorney complete these tasks, he or she may not be as well-versed in the ever-changing tax laws as an attorney who specializes in estates. This specialization is especially crucial if you have a complicated family or financial situation.
If an estate plan is not written following state laws, it can be invalidated by the court. The cost of hiring an estate planning attorney often makes sense when compared to the cost of a long legal battle or oppressive estate taxes. You may want to consult a lawyer who specializes in estate planning if:
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Look for an estate planning attorney you feel comfortable with since you’ll be sharing comprehensive and sometimes personal details about your family and your finances.
A certified public accountant (CPA) is licensed at the state level to prepare tax returns, offer tax advice, and help individuals and businesses with other financial matters. Some CPAs specialize in taxes while others have a general practice. A CPA can prepare most types of tax returns. Although your CPA may legally be able to represent you in some IRS proceedings, it may be advantageous to hire a tax attorney or specialist.
Although you can certainly file your own taxes, it makes sense to hire a CPA if you want the job done quickly and professionally, if you have a complicated tax situation, or you want to better take advantage of possible credits and deductions.
According to the Balance, the average cost of hiring a CPA to prepare your taxes is $273 if you plan to itemize your return or $176 if you do not need to do so. When interviewing potential tax preparers, find out about their pricing structure. They may offer an hourly rate, a fee for each form that must be filed, a minimum fee plus an added fee for a complex return, a fee for each data entry item, or a value-based fee based on the perceived value of the service. Keep in mind that CPAs are prohibited from charging based on the information in your return. For example, they can’t charge a higher rate for those in a higher income bracket. Higher than average fees for tax preparation services are prohibited by the Department of Treasury.
This individual is a tax expert who either has extensive experience as an IRS agent or passes a comprehensive test on the tax code and meets continuing education requirements. An enrolled agent (EA) is the highest designation of the IRS. This person can represent any taxpayer in all tax proceedings, appeals, and matters. In some cases, a CPA or tax attorney serves as an enrolled agent. Like a tax attorney, an EA should be consulted if you are either suing or being sued by the IRS.
Low-income taxpayers are eligible for free tax preparation assistance by IRS-certified volunteers through the Volunteer Income Tax Assistance (VITA) program. To qualify, you must make an annual household income of less than $54,000, be disabled, or have limited English skills. If you’re older than age 60, you can also seek advice and assistance through the Tax Counseling for the Elderly (TCE) program.
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IRS Publication 3676B offers more information about the services provided by these programs. In general, you can receive free tax preparation unless you have:
If you are a member of the military, you can receive free help preparing your taxes through the Armed Forces Tax Council, which is a separate branch of the VITA program described above. As with VITA, assistance is provided by trained and certified IRS volunteers. You can also obtain free access to H&R Block at Home software through Military One Source or call the Military One Source Tax Hotline for assistance at 1-800-730-3802.
These individuals have a preparer tax identification number (PTIN) from the IRS and are authorized to e-file tax returns on behalf of othe individuals and businesses in exchange for compensation. While many EAs and CPAs are authorized tax preparers, these credentials are not required. What’s more, the IRS no longer requires continuing education for authorized providers. Although many of these preparers are quite experienced, make sure you check the person’s education, experiences, and reference before hiring them to prepare your taxes.
If you prefer to go the DIY route, you can use an online tax service such as Turbo Tax to e-file your own tax return. You may even be able to file for free if you have a simple return or if your income is under a certain threshold. Most programs are intuitive to use, with a step-by-step process that walks you through entering your information and checks for errors before filing your return.
If you need help resolving an issue with the IRS and cannot afford to hire a tax attorney, you may be able to access assistance through the Low-Income Tax Clinic. They offer free or low-cost assistance on a sliding scale depending on your income, for issues like disputes about the amount of tax you owe or help preparing for a pending IRS audit. The program is administered by the National Taxpayer Advocate and is designed to help families with income of less than 250 percent of federal poverty guidelines. These clinics take place at universities, law schools, and non-profit organizations and offer assistance in English as well as in other languages.
This individual has passed the certification exam given by the Certified FInancial Planner Board of Standards. Some certified financial planners provide tax services, while others do not. However, they do have education and testing requirements associated with taxation and are qualified to provide these services.
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No matter what type of professional tax service you choose, try these tips to help you select an efficient, reputable preparer.
When deciding whether to hire a tax return provider, ask him or her the following questions: