What Does a Tax Preparer Do?
Did you know that you may be fined 5% of your owed tax for each month if you don’t file your taxes?
But that’s just the start of it; the IRS can investigate your taxes at any time, and you could be liable to pay back tax, fines, interest, or even serve prison time if things aren’t paid correctly.
Unfortunately, claiming it is an innocent mistake won’t hold up in court. However, there are services to help you; one you may have heard of is tax preparers. But, what does a tax preparer do?
Read on to find out!
What Does a Tax Preparer Do?
A tax preparer is a person who sorts out taxes for an individual or a company. This involves preparing, calculating, and filing taxes.
Tax preparers will ensure that you pay the correct amount of tax and aren’t in breach of any tax laws. They’ll also advise you on how you can be savvy with your earnings while still acting within the law.
A tax preparer will require access to your personal information, business profits and expenses, and other trading information to file taxes correctly.
How Qualified Are Tax Preparers?
There are two types of tax preparers: credentialed and non-credentialed.
A credentialed tax preparer is a tax professional who works all year round doing solely tax-related work. These tax preparers include Certified Public Accounts (CPAs), Enrolled Agents (EAs), and Tax Attorneys.
Each of these tax preparers will have completed a tax preparation course and receive their credentials from state boards, the IRS, or state bar associations.
Non-credentialed tax preparers manage people’s taxes without completing accredited training. They may be self-taught or have training from a third-party organization.
Non credentialed tax preparers usually work seasonally and include tax store employees, volunteer income tax assistants, tax accountants, and annual filing season program participants.
When Should I Hire a Tax Preparer?
Tax preparation services are a valuable tool for many people. If you’re confident with your taxes and what you need to declare, you can always do it yourself. However, there are several situations it’d be helpful to consider a tax preparer.
First, if you value time over money. All you need to do is share your details with a tax preparer, and they’ll do the hard work for you.
Next, if you’re unsure about what you need to declare. A tax preparer will have sound knowledge of tax law and ensure that you aren’t in breach of any of your declarations.
Finally, if you need tax advice. A tax preparer can advise you exactly where to channel your income and expenses to have the best outcome without breaching tax law.
The 101 on Tax Preparers
This guide has answered the common question, ‘what does a tax preparer do?’ Tax preparation services are invaluable for many professionals, particularly in the self-employed and freelance sectors.
So, if the ins and outs of paying taxes go straight over your head, it may be worth considering hiring a tax preparer to help you out!
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