Tax season is upon us. Now is the time to get familiar with the key details before filing your individual or business returns. Companies can start filing on January 16th, while individuals can begin submitting paperwork on January 29th. Here's everything you should know about filing taxes in 2024.
What is a tax preparer?
A tax preparer is a licensed professional who helps individuals and businesses calculate and pay their taxes. They are equipped with advanced knowledge of deductions, credits, and other financial matters related to filing taxes, which can potentially save you money and even prevent an audit.
Tax preparers vary by professional qualifications and understanding of applicable laws, so it’s important to do some research before hiring one. Here are some of the more common tax professionals you will come across.
What are the most common types of tax professionals?
Certified Public Accountant (CPA)
CPAs are held to the highest standards of professionalism and ethics. As with CFP® Professionals and CFA charterholders, CPAs must meet education, examination, and experience requirements.
Enrolled Agent (EA)
An Enrolled Agent (EA) is a tax practitioner authorized by the US Department of Treasury to represent taxpayers before the Internal Revenue Service (IRS). An EA must specialize in taxation and is required to meet detailed qualifications, take annual continuing education classes, and maintain ethical standards set by the federal government.
Tax Attorney
A Tax Attorney is a legal professional specializing in tax law, providing advice and representation for individuals or organizations. They can assist with navigating laws and regulations related to state, federal, and international taxes. In some cases, they may advise on matters related to reducing taxable income and preparing relevant documents, such as filling out tax forms or providing legal defense against tax-related charges.
Should you hire a tax professional?
Hiring a tax preparer can be beneficial in many financial situations. Working with a professional allows you to maximize your deductions, understand all the laws and regulations, and ensure that your taxes are filed correctly and completely. Remaining compliant with all tax requirements is extremely important for any business or individual, so it’s vital to consult an experienced and qualified expert.
Here are three common scenarios that might warrant hiring a tax preparer:
- You’ve experienced a major life event. Big life changes like expecting/having a child, moving, changing jobs, receiving an inheritance, or getting married or divorced are all good reasons to seek professional tax advice.
- You’re self-employed. For independent contractors and freelancers, the process of filing taxes can be especially confusing and time-consuming. From understanding estimated payments to determining deductions for home offices, navigating the tax process alone can become a headache. A seasoned tax professional can take the worry out of tax season and allow you to focus on running your business.
- You want to potentially save more money. Tax prep software can only get you so far. An experienced tax professional can help maximize savings this tax season. They have years of experience handling taxes for a variety of clients in different situations and know the ins and outs of the tax code. The good ones will even get you started on planning for the next filing season.
How to prepare for Tax Day 2024
Tax season is a stressful time for many of us, but it doesn’t have to be. Follow these four simple steps to ease your anxiety this year.
- Start early: It is never too early to start preparing for the upcoming tax season. Try creating a timeline with deadlines to ensure that all your paperwork, documents, receipts, and other important information are gathered and organized before you file your taxes. Doing this ahead of time can help reduce stress when it comes time to actually file.
- Organize your information: Gather all of your important documents and necessary paperwork, such as W-2s, 1099s, investment statements, and bank statements. Make sure to have copies of any charitable donations or medical expenses that may count as deductions. Having everything organized in one place will make it much easier to complete your filing.
- Don’t wait to hire a tax professional: Ideally you would have hired one already, but it's not too late. The earlier you hire a tax pro, the more peace of mind you'll have when professionals are taking care of everything for you. It will also allow you to avoid waiting in line with countless others who delayed the process until the last minute.
- Take advantage of tax credits: There are a variety of tax credits available that you may be able to take advantage of, such as the Earned Income Tax Credit (EITC) or the Child Tax Credit (CTC). Make sure to research which credits you qualify for and how much money you can save by claiming them. And, of course, solicit the help of a professional to alert you to any potential deductions or credits that may apply to your situation.
Final word
This year’s filings will be a breeze with the right tax professional on your side. And remember the following: start early, don’t wait until it’s too late to hire a tax professional, and work with your tax preparer to take advantage of all available tax credits.
At Facet, we blend the effects of income taxes into your overall financial plan by looking for opportunities to minimize your long-term tax liability. In addition, by partnering with your CPA, we ensure that all the strategies we put in place deliver the desired impact.
To learn how Facet can seamlessly work with your tax team, simply click the button below.
