The end of the year is fast approaching, which means that tax time is approaching. Maybe right now, you want someone to help you.
Recently, I was a panelist in the Yahoo Finance series, Fund your future, with Kathy Pickering, tax director at H&R Block, Dan Geltrude, tax accountant and founder Geltrude & Companyand Janna Herron, personal finance editor at Yahoo Finance.
Part of the discussion, led by Yahoo Finance Live Anchor Rachelle Akuffo, focused on how to hire a tax preparer, which may be even more suitable for those who have done contract work, successful set up their own businesses or perform subcontracts to enhance their regular operating income in the face of inflation.
In fact, the percentage of workers reporting that they are self-employed will remain above pre-pandemic levels in 2022, according to an analysis of the Center for Economic Policy and Research.
If you’ve always worked for an employer that deducts taxes from your paycheck, “the first year of paying taxes as a self-employed person can be very educational,” Pickering told Yahoo Finance. “A lot of people are surprised by their tax obligations for the first time.”
For example, there are business expenses that can be deductible and help reduce your tax bill, but you need to cover those that the IRS deems eligible.
“One of the big questions is can I answer home office deduction,” Geltrude told Yahoo Finance. “Just because the world has changed, and now you’re working from home, and it’s your new office, that doesn’t mean you get the home office deduction. However, for those who are self-employed, meaning if you’re doing something on the side, you’re your own boss, the deductions associated with that gig work, may suffice. condition. “
And then there are the life changes, which often mean tax changes that can make you turn to a professional.
“When someone goes through a major life change, such as getting married, having a baby, or getting a divorce, they don’t often think, oh my gosh, I should talk to my tax advisor right now to figure out what to do. understand what’s going on. ,” said Pickering. “All of that totally affects your taxes.”
Sometimes, just a little change in your withholding to make sure you’ve deducted the right amount, or make sense of the filing status of your choice, can make a really big difference, Pickering.
“It’s important to do it right,” she added.
How to find a CPA or accountant
Ask for referrals from friends, family, or colleagues in your field. Certified Public Accountants (CPAs) often direct their practice to certain specialties, such as small business owners, high net worth individuals, or clients working in specific industries. Check login information at cpaverify.org/.
Search IRS directory of tax preparers. This is a list of tax preparers with required preparer tax identification numbers or PTINs such as CPA, registered agent (EA), and attorney who have current IRS-recognized credentials.
Many state accounting boards and state CPA associations have online member directories.
EAs are federally licensed tax practitioners who are authorized to prepare tax returns for individuals and businesses. National Association of Registered Dealers (NAEA.org) has a directory of EAs searchable by major, language, and location.
Find out in advance how they bill and whether they are available after tax season to answer questions or if they specialize in a certain area or industry.
Check out free tax return resources
If you earn less than $58,000 per year or are age 60 or older, you may want to consider preparing your tax return through Volunteer Income Tax Assistance (VITA) or Senior Tax Counseling. age (TCE) programs. These services are funded by the IRS and staffed by trained volunteers to provide basic tax preparation services to the public at no cost. If you qualify, use the VITA/TCE locator to find a provider near you.
AARP Foundation Tax-Aide-Aide provided direct and virtual tax assistance to anyone, free of charge, with a focus on taxpayers over 50 and low to moderate income. Tax-Aide volunteers are located nationwide, trained and certified by the IRS every year.
“You want to make sure you don’t make some obvious mistakes on your tax return,” says Geltrude. “Sometimes it’s as simple as putting the wrong Social Security number on your return, or not matching the numbers correctly. The IRS will review your tax return for errors. Being diligent in preparing tax returns to make sure everything is reported properly is one of the keys to not being invited to join the IRS tax auditor.”
Kerry is a Senior Journalist and Senior Correspondent at Yahoo Money. Follow her on Twitter @kerryhannon
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