More taxpayers seeking professional help
By John Byczkowski
Cincinnati Enquirer
Wayne Baughman isn't about to do his own taxes.
Some tax preparers provide help you don't need — inflating deductions, manipulating income and playing other games to reduce a tax bill. In 2004, the IRS won 117 convictions against tax preparers who committed fraud — 75 percent more than in 2003. The IRS gives these tips on choosing a tax preparer: • Avoid those who claim they can get larger refunds than other preparers. • Avoid preparers who base their fee on a percentage of the amount of the refund. • Use a reputable tax professional who signs your tax return and provides you with a copy for your records. • Check credentials. Is the preparer an accredited tax preparer, enrolled agent, certified public accountant, or CPA, licensed public account or tax attorney? • Ask questions. Do you know anyone who has used the tax professional? Were they satisfied with the service they got?
A consultant on corporate training and public speaking, Baughman realized several years ago his business had grown beyond his ability to fill out his tax return. "It was growing, getting multifaceted, and I was having a lot of unknowns coming in that I wasn't sure what to do with," he said.
CHOOSING A TAX PREPARER
So the Cincinnati resident hired Tax Tyme in West Chester, Ohio, to do his taxes, and today he wouldn't have it any other way. "I don't want to mess with it anymore. I'd rather pay somebody for the peace of mind that it's done correctly," he said.
More Americans are opting to have their taxes done by a paid preparer. Of more than 130-million tax returns filed in 2002 (the latest figure available), roughly 55 percent were signed by a paid preparer. That's 72.5 million returns, nearly 16 million more than 10 years earlier.
Taxpayers looking for someone to do their taxes face a range of options, from tax preparation services such as H&R Block or Jackson Hewitt to enrolled agents, CPAs and tax lawyers. The costs vary — and can be expensive.
Most people seeking a tax preparer for the first time have gone through some kind of life-changing event, said Cindy Hockenberry, tax information analyst for the National Association of Tax Professionals in Appleton, Wis.
They've sold property, been married, been divorced or started a business. All those situations have tax implications. "If you have any questions at all in your mind, you're going to want to see a tax professional," Hockenberry said.
But which one? Almost any tax preparer will tell you he or she can handle just about any tax situation. What they charge, however, correlates with their clientele. Taxpayers with the most complex situations gravitate toward the highest-cost services.
H&R Block, for instance, says its average customer pays $140 for tax preparation. With an army of 96,000 seasonal tax preparers and 15,000 full-time preparers, the bulk of its business is individual tax returns. Block also offers a "premium" service for more complex situations, including small business.
Continuity is important for tax planning, to help lower your tax bill on your next return. "We like to remind people that tax planning for 2005 needs to start now," said James Sparrow, at the CPA firm Rankin Rankin & Co. in Fort Wright, Ky. "Having someone familiar with your particular circumstances can help with that problem."
Good preparers should help you get organized. And they will not promise a refund.
"My clients don't get refunds," said John Hatcher, who teaches accounting at the Krannert School of Management at Purdue University in Indiana. "With good tax planning, you don't get refunds."
