It’s the most taxing time of the year

You know the holiday season is over when three things happen:

  • Ads with Christmas trees and Santa Claus stop appearing on TV.
  • You’ve gone back to work or school.
  • The Internal Revenue Service (IRS) announces the opening of tax season; that is, the first day it will accept tax returns filed for the previous year.

This year, you’re in luck, because you have a few extra days to file. Tax season begins Jan. 19. While it normally ends on April 15, when the 15th falls on Friday, Saturday, or Sunday, as it does this year, the deadline is moved forward to the next business day.  Because of Emancipation Day observances in Washington, D.C., the filing deadline for most of the U.S. is on Monday, April 18, (and on Tuesday, April 19, in Maine and Massachusetts, because Patriots’ Day is observed on the 18th).  States and localities with income tax filing requirements usually run their tax seasons simultaneously with the IRS, as their returns generally build on IRS filings.

How do I know all this? Well, in addition to writing about the intersection of consumer advocacy and marketing for this site, I’m an accountant. So I thought I’d take a post or two to tell you what you need to know about the upcoming tax season.

If you prepare your own return, you can find the necessary forms on the IRS website, state and local government websites and at public libraries. You can use tax preparation software, such as TurboTax or TaxAct.

Also, you can electronically file using the IRS Free File module on its website. This module connects you to an IRS-approved provider of e-filing services. If you have a simple return to prepare, with only a few sources of income and deductions to report, such as wages and interest income on a bank account, this may be your most cost-effective option.

Related story:   "I called them and told them to cancel everything"

There are also volunteer income tax preparation programs, sponsored by charitable organizations such as New York Cares, as well as Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE), sponsored by the IRS. In many instances, there are limits on the types of returns they can prepare, so check their requirements before you use them.

For more complex returns, there are many types of paid preparers, such as certified public accountants (CPAs), attorneys, and enrolled agents (EAs), who are federally authorized professional tax preparers. Commercial tax preparation services, such as H&R Block, Liberty Tax Service, and Jackson-Hewitt are also available. Their fees vary depending on a number of factors, including what types of income, deductions, and credits you need to report and the time involved to prepare your returns.

Some tax preparation services offer “rapid refund” services, which are loans against anticipated tax refunds, often at high interest rates. Often, these services are offered by other commercial businesses, with the loans offsetting payments for the businesses’ other goods or services. Be careful before choosing to use these types of services.

Believe it or not, the IRS doesn’t require preparers who are not CPAs, attorneys, or EAs to take continuing education courses and pass tests to prove that they are competent to prepare returns (although some states do). Anyone who wants to prepare tax returns for a living may hang out a shingle, although only CPAs, attorneys, and EAs may represent clients in IRS audits and court cases.

The Taxpayer Advocate Service of the IRS, headed by National Taxpayer Advocate Nina Olson, recommends the following in choosing a tax preparer:

  • Ask the preparer directly about his or her qualifications and experience level in preparing tax returns. The preparer should convince the taxpayer that he or she possesses sufficient knowledge of relevant tax law — not merely completion of return preparation software training or an “ability” to obtain large refunds for taxpayers. Further, the taxpayer should check with the Better Business Bureau or the state consumer protection website for any complaints or ongoing investigations against the preparer or the firm.
  • Make sure the preparer signs the returns and fills in his or her Preparer Tax Identification Number (PTIN) or Employer Identification Number (EIN) where indicated on the tax forms.
  • Obtain a copy of the returns signed by the preparer and keep the copy in case of any problem with the returns.
  • Ask the preparer for a business card or brochure and place it in their tax file with a copy of the invoice for the preparation services.
Related story:   Read this before you file: 3 insider tips for tax season

In 2014, Olson testified before Congress about the dangers posed by “incompetent and unethical return preparers” to their clients.

Filing a tax return is one of the few instances where most people are required to actively engage with the government. It’s very important to make sure that whoever prepares your return knows what he or she is doing and does it right. This is because the penalties — financial and otherwise — for failing to file returns, filing late, or filing incorrectly can be extremely severe (large fines and jail time).

Do your homework before you file your return — and that includes choosing the right preparer.

Jennifer Finger

Jennifer is the founder of KeenReader, an Internet-based freelance editing operation, as well as a certified public accountant. She is a senior writer for Read more of Jennifer's articles here.

  • sirwired

    For the past fifteen years (essentially, ever since I could no longer file the 1040-EZ), I’ve just paid my $30 for this year’s copy of H&R Block At Home (formerly H&R Block TaxCut, formerly Kiplinger’s TaxCut) and it does all the work.

    People complain a lot about the tax filing process, but really for most taxpayers the form filling process is pretty painless if you use software. Most people that use preparers could save a LOT of money by using tax software. (Even if you don’t own a computer, a few hours at a terminal in the library and you are good to go.)

    I don’t think your average paid preparer (especially the large chains that rely heavily on seasonal employees) can really do much that software can’t. If you can’t do your taxes with computer programs, you probably need to skip a preparer and go right to a CPA.

    That said, the fact that we have a whole system of added-cost software instead of just doing all this on the IRS website is disgraceful. (And it’s not the IRS’s fault; legislation prohibits them from implementing direct e-filing, a result of lobbying by Intuit.)

  • Barthel

    I prepare my tax returns by hand on paper forms and mail it in. I have my refund electronically deposited into my checking account. I don’t want to download tax software to my computer or pay for it.

  • Carchar

    When I started using Turbo Tax, I stopped procrastinating by filing an automatic extension. Now I file by the April due date and forget about it.

  • PolishKnightUSA

    About the reason why one can’t efile directly with the IRS: I suspect in that legislation it’s why most major brands allow for “free” efiling for EZ Federal tax forms (and you’re on your own for state or to “upsell” you to the state form.) In theory, that makes sense since the state form is out of the IRS jurisdiction.

    The IRS and the Federal government have, how shall we say, a rather spotty record at consumer website building. The IRS, in particular, has an awful record at consumer service and IT (they’re still looking for all those emails they “accidentally” deleted.) Trust me, you DON’T want them writing consumer tax preparation website code.

    I also know folks who work inside there and some of the stories I heard…

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