Dear Ms. Plaid:

How do I know if I am qualified to do my own tax return or if I need to hire a professional tax preparer?

– Not a Tax Pro

Dear Not a Tax Pro,

This is a great question as we are entering tax season and you are starting to get all kinds of tax paperwork in the mail. I firmly believe responsible adults should be able to prepare and complete their personal tax returns unless there are unconventional circumstances.

You should be able to prepare your own tax return if you can confidently answer the following:

  • Your tax situation is simple. You do not run your own business, you are not in a partnership and you didn’t do anything like sell a home, roll over an IRA or cash in stock options.
  • You have time to complete the return and don’t wait until the last minute. The IRS estimates you will need 16 hours to complete the Form 1040.
  • You are comfortable with using a software such as Turbo Tax or Tax Act. These software’s are great for personal preparation and walk you through the steps for preparation.

You can also go to a quick tax preparer like H&R Block if you have a simple return and you just don’t want to do it. Many of the preparers are not Certified Public Accountants, but are enrolled IRS agents and receive specific annual training for tax preparation.

If you have a more complicated tax situation, then you need to consider hiring a Certified Public Accountant to prepare your return. Call a few in your area to determine who would be a good fit.

Below are a few questions I always ask:

1. How does your firm bill for tax preparation services? Is it a fixed price or hours billed?

2. What type of client does your firm specialize in? Do you have lots of doctors as clients, business owners, high net income earners from corporations? You want to find a CPA that has other tax clients like you.

3. What is the time-frame for completion? You do not want someone who says you will get it on the last day due; this shows poor time management.

Your tax preparer should issue you an engagement letter which outlines the responsibilities of the CPA and you as the client.

Tax season does not have to be stressful. Create your plan today and get this marked off your to do list.

Ms. Plaid