- Days left

Tax Help: 2013 May Be the Year You'll Need to Hire a Professional

×
Help taxes
It's hard enough doing your tax return in normal years, when tax laws look a lot like they did the year before. But with the massive changes that the just-in-time fiscal cliff compromise legislation created in the tax code, this might finally be the time to get a professional tax preparer on your side.

Choosing the right preparer could greatly increase your refund by finding tax deductions, tax credits, and other benefits you might miss -- but picking one isn't always easy.

Below, we offer some tips on how to pick your pro. But first, let's look at all the reasons why having an expert on your side makes sense this year more than ever.

Changes at the Edge of the Cliff

Until politicians in Washington managed to come to their last-minute agreement, tens of millions of taxpayers were facing potentially huge tax increases.

In particular, the alternative minimum tax promised to wreak serious havoc on millions of families' returns. The AMT was originally intended to prevent the very rich from using loopholes and credits to avoid the tax man altogether. But time and inflation expanded the number of people who fell under the AMT enormously -- or would have, had lawmakers not annually passed a temporary "patch" to the AMT that adjusted it for inflation.

Thanks to the partisan wrangling in Washington, though, the last temporary patch had expired at the end of 2011, and -- had no fiscal-cliff deal been reached -- initial estimates put the number of new AMT payers this April at upwards of 30 million, with an average tax hit of around $4,000 and some taxpayers seeing even larger increases of up to $8,000.

The fiscal cliff compromise actually solved the AMT issue permanently, and extended low tax rates for the vast majority of taxpayers. But in the process, it brought back some confusing provisions to the tax code. For instance, the measure extended a tax break for charitable contributions made from IRAs. But since the new law didn't take effect until after the ordinary deadline for 2012 contributions, the IRS had to issue special rules to allow taxpayers to make charitable distributions in January, but have them treated as applying to the 2012 tax year.

Looking ahead, things will get even more complicated for many taxpayers. Although the highest ordinary income tax rates only take effect above $400,000 of taxable income for single filers and $450,000 for joint filers, several new provisions apply at lower income levels. Those include the new Medicare surtax of 3.8 percent on investment income, which applies to income above $200,000 for singles and $250,000 for joint filers. Also, phase-outs of itemized deductions and personal exemptions are also back, meaning that, after enjoying several years of temporarily favorable rules, millions of taxpayers will see those tax breaks fade away.

Getting an expert tax preparer to help you now will not only make it easier to get your 2012 tax returns filed but also help you get a head start on planning for 2013's taxes. But you have to find the right tax professional for you.

Who to Hire and When Not to Bother

Most of the advice you'll find on getting a professional tax return preparer in your corner focuses on qualifications. As when hiring any professional, it's important to check on background, experience and quality of service, to get recommendations from friends, and to weigh your particular needs against each candidate's strengths and weaknesses.

But it's equally important to find a tax preparer with whom you're comfortable on a personal level. Like a doctor or lawyer, your tax preparer will learn sensitive personal information about you, and you'll need to feel able and willing to tell him everything necessary for him to file a complete and accurate return.

Moreover, make choices based on the level of difficulty of your taxes. If your only income comes from your job and you typically file a 1040-EZ, you don't have to waste money on a high-powered tax attorney or accountant. But if you're dealing with special tax rules this year, going to the mall to work with a novice preparer at a national chain can cause unnecessary anxiety.

Most importantly, don't wait too long. By the time April rolls around, the best tax return preparers will already be swamped, and you may well find yourself out of luck trying to find one to help you.

So if you're among the roughly 60 percent of taxpayers who'll get expert help on their returns this year, procrastination is the enemy. Go out and find someone to fight for your biggest possible refund now.



Motley Fool contributor Dan Caplinger (@DanCaplinger) still does his taxes on his own.

Increase your money and finance knowledge from home

How to Avoid Financial Scams

Avoid getting duped by financial scams.

View Course »

How Financial Planners go Grocery Shopping

Learn to shop smart and save.

View Course »

TurboTax Articles

A Tax Filing Factsheet for eBay Sellers

You can find almost anything for sale on eBay, from a piece of fine art to clippings of Justin Bieber?s hair. So it's no surprise that the IRS doesn't view all sellers alike in the online marketplace. You may not have to pay tax at all if you are essentially hosting an online garage sale, but if you run your eBay account more like a business, you should be reporting your sales to the IRS.

Tax Tips for Handymen and Odd Jobs

If you work as a handyman or do odd jobs around town for money, you are operating a business in the eyes of the IRS. Since you own your own business, you're likely a self-employed sole proprietor. This means you'll have lots of potential tax deductions to investigate.

Identity Theft: 7 Steps to Reclaiming Your Identity and Keeping it Safe

As more personal information continues to be stored online, the risk of identity theft also increases. In 2014 alone, the Bureau of Justice reported that 17.6 million U.S. residents experienced identity theft. If someone uses your personal data pretending to be you, it's a serious crime. With quick, decisive action, you can help discover the fraud, stop further damage and reclaim your identity. Here are six steps to get you on your way.

Need More Tax Time? File a Tax Extension

If you need more time to complete your taxes, file a tax extension, but don't miss out on your chance for a tax refund by not filing at all. Learn more about tax extensions from this 2012 infographic!