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Tax Preparation

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Tax Preparation Washington, D.C.

Tax Preparation is the yearly process of formally declaring your income, deductions and credits to self-assess your tax obligations under federal and state law. Your tax record serves as important documentation used for lending, employment and immigration purposes.

Taxpayers may self-prepare their tax returns or engage a paid preparer to file on their behalf. In a system that rewards knowledge and penalizes mistakes, great care should be given in selecting a tax preparer, as licensing, education and experience can range widely.

DC Tax Preparation
Due to the complex nature of tax laws, you are likely better off hiring a tax professional if your situation involves self-employment income, rental activity, multi-state returns or an international component.

Selecting a Tax Preparer:

Anyone who is registered with the IRS and has a preparer tax identification (PTIN) can prepare tax returns for pay, however, preparers have different levels of skill, education and expertise. It is important to choose someone who has a credential, as this will serve as an indication of their aptitude and accountability. Credentialed tax preparers include tax attorneys, certified public accountants and enrolled agents.

Credentialed tax preparers are licensed by their state associations or the IRS and are required to maintain continuing legal education requirements and can represent taxpayers on an ongoing basis, beyond tax preparation. Tax law is broad and open to interpretation, so it is important to choose a tax preparer that has experience with your situation, include your individual state. Tax preparers cannot be expected to know everything, so it is important they possess keen research, analysis, reasoning and communication skills.

Why I need a Tax Preparer:

Many taxpayers unwisely self-prepare their tax returns online via turbo tax or some other large commercial tax preparation software company without any human oversight. While this option is sufficient for simplistic one state wage-based returns, it is not ideal for taxpayers with more complex filing requirements such as real estate activity, multi-state allocations, self-employment income and foreign taxes. Based on my experience, I see many errors on self-prepared returns in these situations resulting in tax overstatements and understatements, which ultimately costs the taxpayer grief and money.

Hiring a tax pro should provide the taxpayer much needed peace of mind that their tax obligations are calculated correctly, owing the legal minimum taxes due. Given the cost benefit analysis, it is a wise investment to work with a tax preparer, particularly given that tax prep fees may be tax deductible too.

Working with a Tax Preparer:

Many of my Clients are transitioning from self-preparing returns because of a change in life circumstance making taxes too complicated and have never worked with a tax preparer. As such, they have many questions on substantive tax law as well as the process of working with a tax accountant.

I suggest an introductory phone chat to gain some background to evaluate whether the tax preparer is a good fit for your situation.
You can also share mutual expectations regarding fees, due dates, timing, and the preferred method of sharing tax documents. You should choose a tax professional you feel comfortable working with as tax preparation is highly detailed work that involves sound communication and good rapport between parties.

District of Columbia and State Taxes

It is important to work with a tax preparer who is knowledgeable about your individual state taxes. Many taxpayers move to the DC area and retain their existing accountant who is not familiar or takes time to learn the new state tax laws. In my practice, I see many errors on District returns related to real estate activity, consulting income and Franchise Taxes. Each state has nuance tax provisions and tax preparers cannot be expected to remember them all. However, a good tax accountant will take the time to review state tax returns to make sure they are calculated correctly.