One of the things you loathe is sitting down and sorting out your taxes. You are happier having someone tell you ‘this is the amount of tax you will have to pay for this year’ and paying it out, rather than sitting down and going through the painful process of calculating the tax due.
It gets even more painful when you need to file federal as well as state taxes. And that is when you came across this wonderful person, called the tax agent.
An Introduction to the Tax Agent
So who is a tax agent? Simply put, this is the person you turn to when you need to get your taxes calculated and filed. As is apparent, hiring a tax agent has tremendous benefits. These include saving your time and effort.
Not only that, a tax agent, who is a qualified professional (often a certified public accountant), can point out tax saving opportunities that you may have missed out. The difference can be a significant cost saving, sometimes to the tune of thousands of dollars.
How much a tax agent can be of help depends, apart from how good he is at his job, a lot on your situation. Things become easy for both you and your tax agent if your own finances are in order and you have the basic knowledge related to tax and financial matters.
One thing is for sure: having a tax agent on hand to take care of your tax calculation and filing is a big help, especially if you choose someone working with one of the well-known names in the tax preparation domain. A number of these firms also hand out coupons that you can use to save on tax.
Another thing you should bear in mind is that there are different kinds of tax agents. These range from individuals operating without licenses to licensed agaents functioning individually or working in companies that offer tax preparation services:
• Commercial tax preparers
• Enrolled Agents (EAs)
• Certified Public Accountants (CPAs)
• Accredited Tax Advisers (ATPs)
Hiring a Tax Agent: What to Look For
A tax agent is someone who is going to play a critical role as far as calculating and filing your taxes are concerned. It is only prudent to go for a person who has certain basic things going for him.
Look for a specialist: Go for a person who is a specialist in the kind of taxation you are looking at. A specialist knows his field way better than a jack-of-all-trades, and he can make a serious impact when it comes to identifying potential saving opportunities or problem areas.
Look for Appropriate Qualifications: While it may seem okay to go in for a friend who ‘knows his stuff’ but does not have the required qualifications, simply because a friend may be easier to deal with or because he may really know his stuff, it makes good sense to go in for a qualified professional even if he is not on your list of friends. The qualification is basic proof of the person’s abilities, and you know that you are in considerably safe hands.
Know Your Tax Agent: If you are looking for a tax agent from one of the companies that offer tax preparation services, be sure to know the exact person you are dealing with, and ensure that this person has the answers to all your questions. This saves confusion at a later time.
Accessibility: Be sure to check out your prospective tax agent’s accessibility and communication policy. While this may seem like a trivial thing, it has a vital bearing on your peace of mind, especially when you have a thousand questions to ask and your agent is inaccessible.
Sense of Ethics: In your best interests, it is always safer to hire a tax agent who is strong on ethics. You can probe the prospective person on this front by putting forward ethical scenarios and examining their responses.
Hiring a Tax Agent: Red Flags to Watch Out For
There are a few things you should keep an eye out for when you are looking to hire a tax agent.
Suspicious credentials: The first thing that you should keep an eye out for is whether the person in question has the required credentials. A definite no-no is a tax agent with suspicious credentials or someone without a license.
Unreliable Agent: You should also check the reliability factor in the person you are looking to help you with your taxes. Not only would you be entrusting him with vital details, you would also need to know that they would stand by you in a situation where you are undergoing an audit.