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How to Get the Most Value From Hiring a Tax Preparer

By U.S. News & World Report

It’s that time of the year again: tax season. People are collecting their W-2s and 1099s, looking at IRS publications, filling out forms, sending checks and hoping to receive checks, too.

Filing taxes can be a complicated process, and because of that complexity, many people choose to hire some kind of assistance. Some select tax-filing software, while others hire a person to help them with their tax preparation.

Which option is right for you? And how can you get the most value out of that choice? Here are some tax-filing options to consider.

[See: Answers to 7 Burning Tax Questions.]

Consider whether you need professional help at all. First, if your tax situation just involves getting a small number of W-2s and 1099 forms in the mail, you’re probably better off without a tax preparer at all. Filing your taxes when your financial life is simple is easy. The IRS offers online forms that you can fill out on your computer by simply copying numbers from your W-2s and your 1099 form. If your state has tax returns, it likely offers the same services. You can see how easy it is and what the IRS has to offer by visiting the E-File Options page.

Consider tax preparation software. If you’re technically savvy, tax preparation software is probably a cheaper and more reliable option than a tax preparer, too. Quite often, tax preparers merely use some tax preparation software package to file your taxes for you anyway, so if you’re not afraid of installing a software package and typing in the numbers yourself, you should just use a package like TurboTax. The software essentially walks you through a questionnaire, telling you where to find all the answers that you need, then fills out the tax forms correctly as you type in the numbers. Again, if your tax situation is relatively simple — typical W-2s and 1099s and no complex business arrangements — filing it yourself with the aid of software that makes it easy is probably a better choice.

The time to call in a tax preparer is when things are a bit more complicated, such as when you’ve bought and sold a number of investments or have business holdings or business income, or if you’ve received money from a trust or other atypical sources. While software can still guide you through these situations, it doesn’t always find the best way to organize them and file them, and the eye of a knowledgeable tax preparer can really make the difference here.

[See: 7 Most-Missed Tax Deductions and Credits.]

Visit a storefront service. Who should you hire? There are several options to consider. One option is to simply go with a storefront service like H&R Block. This is probably the best option for someone with a fairly simple return who wants to be cautious or is uncertain about using software on their own to file. Storefront services typically use their own tax preparation software, but instead of you answering a questionnaire on a computer screen, you walk through those questions face-to-face with that preparer.

Hire a tax preparer. Another option is to hire your own independent tax preparer, but in many states, literally anyone can claim to be a tax preparer. If you’re hiring someone, you want the value of a watchful eye, so consider an enrolled agent. An enrolled agent is a person who has gone through a licensing program or has previously been employed by the IRS for five years or more and has gone through an extensive background check. That person is qualified to represent you with the federal government. If you’re choosing to hire a tax preparer, consider an enrolled agent. You can find these professionals through the National Association of Enrolled Agents.

[See: 10 Smart Ways to Spend Your Tax Refund.]

Hire a certified public accountant. Typically, this is going to be the most expensive option, but they’re the best choice if you have a high income and want to consider tax strategies that will reduce your long-term tax burden, or if you have complex business arrangements or a large portfolio of investments. Handling these kinds of things can be really burdensome with over-the-counter tax software, and even an enrolled agent may not want to deal with some sticky situations. However, a CPA is typically more expensive. It really only makes sense to use a CPA for taxes if you’ve got a very complex situation and want to do lots of long-term tax planning.

Different tax preparation solutions will work best for different people. If you’re in doubt, try a simpler solution for yourself and see if it works. You can always move up to a more robust solution if the original strategy doesn’t work for you. And if the simpler solution works, then you’ve saved a great deal of money.

More from U.S. News

8 Ways You Can Prepare Now for Next Year’s Taxes

9 Red Flags That Could Trigger a Tax Audit

10 Tax Breaks for People Over 50

How to Get the Most Value From Hiring a Tax Preparer originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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