Help With Filing Taxes: What Are Your Options?

Filing annual tax returns is a familiar obligation, but complex tax laws can make it challenging. Many people seek assistance to ensure accuracy and claim all available deductions and credits. This guide provides an overview of your options, from professional services to do-it-yourself software, to help you choose the right path for your financial situation.

Types of Tax Preparation Assistance

How you file your taxes depends on your financial complexity and comfort with tax rules. For those with intricate finances, like business owners or investors, professional tax preparers offer expertise. These professionals have different credentials and specializations to meet varied needs.

Professional Tax Preparers

Certified Public Accountants (CPAs) are state-licensed and have broad knowledge in accounting, auditing, and business consulting, in addition to tax preparation. They are well-suited for individuals with complex finances, such as small business income, rental properties, or significant investments. Their holistic financial perspective is also advantageous for year-round tax planning.

Enrolled Agents (EAs) are tax specialists federally licensed by the Internal Revenue Service (IRS). Their expertise is concentrated on tax matters, from preparation to representing taxpayers in audits or appeals. An EA is a strong choice for individuals facing complicated tax issues, back taxes, or IRS notices.

Tax attorneys are lawyers specializing in the legal aspects of taxation. While they can prepare returns, their primary role is handling legal disputes with the IRS, representing clients in Tax Court, and advising on complex areas like estate planning or international tax law. You would seek a tax attorney for legal challenges rather than standard annual filing.

Unenrolled preparers prepare tax returns but are not CPAs, EAs, or attorneys, so their expertise varies. The IRS offers a voluntary Annual Filing Season Program, which requires these preparers to complete annual continuing education to stay current on tax laws. This provides a measure of qualification.

IRS-Sponsored Volunteer Programs

The IRS sponsors two programs that provide free basic tax return preparation to qualified individuals. The Volunteer Income Tax Assistance (VITA) program is for people who make $67,000 or less, persons with disabilities, and taxpayers with limited English proficiency. VITA sites are staffed by IRS-certified volunteers and located in community centers, libraries, and schools.

The Tax Counseling for the Elderly (TCE) program offers free tax help, focusing on taxpayers who are 60 and older. TCE volunteers specialize in questions about pensions and retirement-related issues unique to seniors. There is no age or income limit to receive assistance through this program.

Tax Preparation Software

For individuals with straightforward tax situations, tax preparation software is a do-it-yourself solution. These programs guide users through filing with interview-style questions and are best for those with W-2 income and standard deductions. Many companies offer free versions for simple returns, with paid tiers for more complex scenarios like investment or self-employment income.

Information and Documents Needed for Filing

Gathering the correct documents is an important step for an accurate tax return that includes all entitled tax breaks. The required information falls into several categories.

Personal Information

You will need the full names, dates of birth, and Social Security numbers (SSNs) or Individual Taxpayer Identification Numbers (ITINs) for yourself, your spouse, and any dependents. A current mailing address is also required. For direct deposit or debit, have your bank routing and account numbers ready.

Income Documentation

All income sources must be reported, each with a corresponding tax form. For employment, you need a Form W-2 from every employer. Freelancers or independent contractors will need Form 1099-NEC and Form 1099-K. You must keep records of all income, even if you do not receive a form for it.

Investment income includes Form 1099-INT for interest, Form 1099-DIV for dividends, and Form 1099-B for proceeds from broker transactions. Business partners or S corporation shareholders receive a Schedule K-1, while unemployment is on Form 1099-G and Social Security benefits are on Form SSA-1099.

Documentation for Potential Tax Breaks

To reduce your taxable income, you need proof for any adjustments, deductions, or credits you claim. Gather the following documentation if applicable:

• Records of contributions to a traditional IRA and Form 5498-SA for Health Savings Account (HSA) contributions.
• Form 1098-E for student loan interest paid.
• Form 1098 for mortgage interest paid, plus records of state and local taxes for itemized deductions.
• Receipts for all charitable contributions.
• A summary of medical expenses, as costs exceeding 7.5% of your adjusted gross income (AGI) may be deductible.
• Form 1098-T to claim education credits.
• Records of childcare expenses, including the provider’s name, address, and Taxpayer Identification Number, for the Child and Dependent Care Credit.

Prior Year’s Tax Return

Keep a copy of last year’s federal and state tax returns. Your prior-year AGI is required to verify your identity when e-filing. The old return is also a useful reference for you or your preparer to ensure you report all income and claim recurring deductions.

The Process of Working with a Tax Preparer

Working with a tax professional involves finding the right person, sharing your information, and reviewing the final return. This structured interaction is designed to produce an accurate and complete tax filing.

Finding and Vetting a Preparer

A reliable starting point is the IRS Directory of Federal Tax Return Preparers with Credentials and Qualifications, which lets you search for local CPAs, EAs, and attorneys. When contacting potential preparers, ask about their fees, their experience with tax situations like yours, and their availability after tax season. Also ask for their Preparer Tax Identification Number (PTIN), which is required for anyone who prepares federal tax returns for compensation.

The Engagement and Information Exchange

After selecting a preparer, you will sign an engagement letter that outlines the services and fee structure. You will then provide your tax documents. Many firms use secure online portals to upload forms, while others prefer an in-person meeting. Your preparer will review the information and may ask clarifying questions, but it is your responsibility to provide all information accurately.

Reviewing the Draft Return and Finalizing

Your preparer will provide a draft copy of the return for your review. Carefully check all personal information, income figures, and deductions for accuracy, as you are ultimately responsible for the information on your return. Once you confirm everything is correct, you will sign Form 8879, IRS e-file Signature Authorization. This form grants the preparer permission to e-file on your behalf.

Post-Filing Steps

After your preparer submits the return, they should receive an e-file acceptance notification from the IRS within 48 hours, confirming it has been accepted for processing. Your preparer should provide you with this confirmation and a final copy of the filed returns. Keep this final copy and all supporting documents for at least three years, the period during which the IRS can audit a return.

Navigating Tax Preparation Software

For a hands-on approach, tax preparation software is an effective tool for filing taxes. The process is designed to be user-friendly, but success depends on choosing the right product and proceeding methodically.

Choosing the Right Software Package

First, select the appropriate software. The IRS Free File program allows taxpayers with an AGI of $84,000 or less to use guided tax software from partner companies at no cost. For complex situations like self-employment or investment sales, a paid version of commercial software is often necessary. These paid tiers provide the additional forms and guidance needed for these scenarios.

The Step-by-Step Data Entry Process

Tax software uses an interview-style format, asking questions about your life, income, and expenses. You will be prompted to enter information directly from your documents, like W-2s and 1099s. Work through the sections in order, ensuring you answer each question accurately. Most software includes built-in explanations that can clarify what information is being requested.

Final Review, Payment, and E-Filing Submission

After entering your information, the software performs a final review. This automated check is designed to catch common errors or inconsistencies that could trigger a rejection from the IRS. If using a paid version, you will proceed to the payment step after clearing the review. Follow the on-screen prompts to authorize and electronically transmit your return to the IRS and state agencies.