3 Keys to Choosing the Best Tax Pro

Here's a question from Money Central: Should you do your own taxes or hire the job out? Here are some issues to consider:

• Are you prepared to give your taxes your time?
• Are you prepared to put up the cash to hire a preparer?
• Are you familiar with all of the tax law changes?

Here's what Money Central says a good tax preparer should do for you:

• A good tax preparer starts by asking a lot of questions.
• A good preparer understands where you’re coming from and your risk tolerance.
• A good tax preparer is a teacher who educates you on not only what’s allowable as a deduction, but also how to structure your actions to minimize your tax exposure.
• The good preparer should focus not only on your 2004 transactions but on what to do to reduce your 2005 taxes as well. The interaction should be proactive, rather than just reactive.

And a few parting comments:

Let me make a suggestion: consult with a good tax professional at least every three-to-five years just to find out what you’re missing.

Don’t minimize the psychological impact of professional tax preparation, either. There’s usually a sense of security in having a professional do your tax return.

I've stated before that I have an accountant who does my taxes every year. I use one because:

• They'll probably save me more than what I pay simply because they know more about the tax law than I do.
• It saves me 30-40 hours worth of work. Even if my time was only worth $10 per hour (it's worth a lot more), it would still be worth it.
• My taxes are complicated and have a few legal considerations that need to be followed closely. I feel better having a professional looking over the information. There is a "peace of mind" factor that the author discusses above.
• My income is high enough to justify the cost.

Comments

[Early Retirement Extreme]

Any ballpark estimate of what they charge? $100? $200, $300, ... ? I too spend about 30-40 hours on my returns, but I imagine that a pro would spend less than an hour.

[FMF]

For an hour's work I'm guessing it could go from a low of $40 (for someone who does taxes "on the side") to a couple hundred dollars for a CPA.