Tax software does a good job of breaking down tax preparation
into manageable bites. It will alert you to money-saving breaks,
flag potential errors, do the math and let you e-file your return.
And if your adjusted gross income for 2014 was less than $60,000,
you can use the
IRS Free File program
, a public-private partnership that allows you to prepare and
e-file your federal tax return at no cost.
But sometimes you need to call in a pro. If your tax situation
is complicated, you could miss out on tax breaks that could save
you hundreds or even thousands of dollars. Worse, you could make
mistakes that could trigger an audit. Here are some instances when
you should get help from a tax preparer:
1. You're self-employed or own a business. Taxpayers who work
for themselves are eligible for a long list of deductions that
do-it-yourselfers might overlook. They're also subject to more
scrutiny by the IRS. A tax professional can identify appropriate
tax breaks and help you maintain records that will withstand an IRS
2. You own rental property. The rules governing tax treatment of
rental property are byzantine. In addition, this is another area
that tends to attract IRS attention, particularly if you report
large rental losses.
3. You have a large investment portfolio. The Affordable Care
Act imposed a 3.8% surtax on unearned income for single filers with
modified adjusted gross income of $200,000 or more, or married
joint filers with MAGI of $250,000 or more. An experienced tax
professional can help you take advantage of tax breaks that will
lower your MAGI and recommend changes that could shield you from
the surtax on your 2014 tax return.
The right credentials: If you decide to get help, be aware that
anyone can call himself or herself a tax preparer. Consequently,
"it really is consumer beware," says IRS taxpayer advocate Nina
You can get a list of local certified public accountants from
your state's CPA society. There, you can also find out whether
complaints have been filed against an individual. Some CPAs also
have a personal finance specialist (PFS) designation, which means
they can provide advice on investing, retirement and estate
Another option is an enrolled agent. Enrolled agents must pass a
rigorous test and meet annual continuing-education requirements,
and they are licensed to appear before the IRS. To locate an
enrolled agent, go to the Web site for the
National Association of Enrolled Agents
Before hiring a preparer, ask how he or she sets fees. Some bill
at an hourly rate; others charge a set fee based on the complexity
of your return. Get this information in writing.
You should also make sure the tax preparer will be around after
April 15, Olson says. Some preparers set up shop during the tax
season and disappear after the tax deadline. That could be a
problem if the IRS has questions about your return.