Getting help to file taxes

Paying taxes has become so complex that many people no longer can prepare their own tax returns -- or simply don't want to be bothered. Yet, there's no way the taxpayer legally can shirk the responsibility to file.

Although it's only February, that's a key reason you should be thinking now about April 15 when your federal income tax return will be due.


Do you wonder if there's any way to make the job simple? There isn't. Yet, you may reduce your anxiety by turning the task over to someone else. That's what millions of Americans do, resigned to the impossibility of adequately understanding the tax code. Nevertheless, if your personal finances are uncomplicated, many you may undertake to work your way through Form 1040. And this year several million taxpayers will use the new and simpler 1040A. Form 1040A has been changed to make it accessible to people with pension or annuity income, IRA distributions or taxable Social Security benefits -- and little more.

Where do you turn for help? If even the thought of filling out the forms repels you and your finances are rather straightforward, you are safe in using a storefront tax preparer, some of the nation's top accountants believe. An alternative is an "enrolled agent," a tax preparer who has been examined by the Internal Revenue Service and qualified to practice. But if your finances are complex, you may be served best by a certified public accountant.


Using a CPA is almost always advisable if you are self-employed or have income from a variety of sources.

What about software for your personal computer and the many tax manuals now in the bookstores? These are designed to lead you to appropriate results, but you still need some understanding of the tax laws to get the proper answer, in the opinion of Alan E. Weiner, CPA, a tax partner of Holtz, Rubenstein & Co. of Long Island, N.Y.

Most non-professionals will be thwarted quickly by interrelated calculations that must be made by those who are self-employed, says Weiner. In the return for tax year 1990, you have to take into consideration the fact that you can deduct half of your self-employment tax before you can calculate your self-employment income. Or before you can know the amount you can put in a simplified employee pension plan or profit-sharing plan. These are difficult calculations.

Before you retain a tax preparer, get referrals from your lawyer, your neighbors or business associates. Make certain your accountant is licensed in your state and is a member of the American Institute of Certified Public Accountants. Determine in advance the level of service you are buying and what the fees will be. Above all, consider whether your personalities are compatible. You must be comfortable communicating with each other.

A way to keep costs down when you use a professional tax preparer is to organize your receipts and documentation, says Howard W. Dragutsky, CPA, of Miller, Kaplan, Arase & Co. of North Hollywood, Calif. "If you're a 'shopping bag' taxpayer who comes in with a bag of unorganized receipts, someone has to put those records in order. You're going to pay for it. The preparer may discourage you from coming to him because you will object to the fees," he said.

"Most CPAs will ask to see tax returns for the previous two years," says Jack Oppenheimer, CPA, a partner in Geller, Ragans, James, Oppenheimer and Creel of Orlando, Fla. This gives us a starting point to know what we're looking for in the current return. We also want to look for past errors that might generate refunds." To reduce billable time to the client, Oppenheimer asks his clients to fill out an "organizer" -- a questionnaire laid out in tax return format.