Hiring a Tax Professional Isn’t In My Budget, What Do I Do?

February 7, 2021

Read Time: 8 minutes

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“I know that outsourcing my tax preparation to a skilled tax professional is the best option, but unfortunately, I do not have the funds to do so. The last year was really rough, I had to cut expenses – leave memberships – stop working with coaches – and more just to make sure my bills are paid. 

I would love to outsource my tax preparation, but it’s just not feasible.”

Sound like you? If so, keep reading!

The price conversation was intentionally not discussed in my last post.

If you read my Ultimate Guide to Outsourcing Tax Preparation, you may have noticed that I didn’t really talk about the price of doing so.

A huge reason for this is that you will find a wide range in price of tax preparation services among tax professionals. Some quote by the hour or tax form, some do package rates, some do value pricing, and some do a mix of these based on your specific situation. 

There’s no way of knowing how much a tax professional will charge you without you discussing this with them and no range I feel comfortable giving. It is not my place to create a price anchor or expectation for the industry.

I also want you to focus on finding the tax professional that is going to resonate with you, provide the best service for your situation, and be the best choice for you; rather than the cheapest one you can find.

 

Note: Finding a tax professional that you resonate and feel comfortable with is invaluable

Of course, I understand that sometimes it doesn’t make sense for you to financially hire a tax professional. Due to this, I wanted to share some options that are available for you to help until you are at the place where you can afford one.

 

Tax Clinics

The IRS has created two different tax clinics available for taxpayers to use for free. These tax clinics are staffed by IRS-certified volunteers to create a reliable and trusted source for tax preparation. 

The volunteers of the two clinics must take and pass tax trainings and must certify their knowledge of the tax laws. The volunteers are often retired tax professionals who want to give back to their community. The IRS also has a quality check process for each tax return prepared to ensure it is as accurate as possible.

Volunteer Income Tax Assistance (VITA)

In order to be eligible for VITA, you must meet at least one of these requirements and need assistance preparing your return:

  • Make $57,000 a year or less
  • Have a disability
  • Speak limited English

Tax Counseling for the Elderly (TCE)

TCE is a program that specializes in questions about pensions and retirement-related issues unique to seniors, thus it is only available for those who are 60 years old or older.

Limitations

The biggest downside of these tax clinic is that it only covers certain tax situations so you might not be eligible strictly based on this, click this link to learn more. Noting my audience, the tax situation you may have that is most likely not covered is a schedule C business with a loss, depreciation, and/or business use of home. Super huge bummer!

However, if you do still find yourself eligible – use this link to find a local provider near you.

Doing It Yourself

I am not a fan of this option as you may be very well aware of, but I also know that it is an option that many people do regardless of their situation. 

I want to point out that handling taxes is a mix between accounting and law. While it deals with numbers, finances, and formulas, it also deals with reviewing tax code and applying that legislation to your specific situation.

If you’re still up for the challenge, here are a few tips to help you in this area.

Researching

I know a lot of people, even professionals, turn to Google to answer their questions. The concern when it comes to taxes is you have no idea who you are getting that information from and how up-to-date it is.

Most blogs I’ve found with answers to tax questions were not created by a tax professional, they were created by someone who owns a business who did some Google searching themselves or maybe they are regurgitating what they remember their tax professional telling them. Both of these are terrible. Also, it is unlikely that the tax professional agreed for them to share the tax information discussed with their audience.

You also have to remember that the tax code is often circumstantial. What applies to one business owner or individual does not necessarily apply to another. 

Now, there’s a chance that you find something that is from a reputable source – an interview, a tax professional’s blog, etc – there’s a chance it is outdated. We had the TCJA act in 2018 that changed things, we had the Pandemic in 2020 that changed things, and we have various changes that are made each year. All of which can make the information outdated and unreliable very quickly.

The best way to move forward is to still use Google to answer your question, but throw in ‘IRS’ at the end of the search. This will bring IRS websites to the top of the list and hopefully filter out less reputable options. The IRS’s website is going to be up-to-date and a reputable source when it comes to tax code.

From here, it’s all about interpreting the information you find on the IRS’s website to be applicable to your specific situation. This is not always obvious and may require you to consider the grey areas of the tax code, make some assumptions, do some additional research (again, not the easiest as finding reliable & up-to-date resources is difficult and often not free), and maybe even reach out to the IRS for help.

Note: You will never see me suggest using a big box store.

Filing Options

Turning to software tends to be the choice most people use when it comes to filing their tax return and I don’t blame them! I had to fill out paper tax returns throughout University for projects and tests – it was actually considered cheating if we used software – and it was tedious! I’d much rather give the info to software to put into the right boxes.

What software options are there?

FreeTaxUSA* is a software that I’ve used since… 2013 and I still prefer to use it as it works really well for my personal situation. Of course, I do have my tax software that I use for client returns, but it costs more than FreeTaxUSA.

Now, FreeTaxUSA* is not designed for every situation and it is not completely free, you have to pay for your state return to be filed, which is about $13-15 for each.

Click this link to learn more about FreeTaxUSA*, opens in new window.

*Affiliate Link – No additional cost to you, I receive a small percentage of your purchase if you use my link.

What are my other options?

If you have AGI less than $72,000, you can qualify for filing free using IRS Free File partners and some of those include free state filing for select states. These partners are different software companies who made an agreement with the IRS to offer free filing for those who qualify. 

If your AGI is greater than 72,000, you can file a free form with the IRS using their Free File Fillable Forms. It does not include the state filing and you don’t get much guidance or help on filling it out.

Note: Some COVID-specific legislation is not supported by software and requires you to paper file.

Additional Considerations

Know your rights

It’s so important for you to know and understand your rights as a taxpayer. The IRS agrees too! They have created a Taxpayer Bill of Rights that you can use to help make sure you are crystal clear on what is expected of you and what protection you receive.

You can learn more about these rights on the IRS’s website by clicking this link.

If you feel that your rights are being violated or you are running into issues with the IRS, then the Taxpayer Advocate Service might be a great place for you to check. Click this link to be taken to their website.

Write down questions

As you are preparing your return, if there are things that don’t add up or make sense to you, write down any and all questions you have!

Then take those questions and dig into them, research them, maybe even connect with a tax professional and PAY them to ask them some questions.

Make sure that you feel confident with what you are putting on your tax return. Make sure that if the IRS questions your decisions, that you feel you have at least an 80-90% chance of winning.

Note: The IRS has a support line for questions (click for the appropriate number). Your state likely does too!

Review Your Return

This is a bit more obvious than when you hire someone else to tackle your reutrn, but as someone who has prepared tax returns for a living – this is my BIGGEST tip to anyone.

REVIEW YOUR RETURN!
I suggest reviewing your return 1-2 days after you complete it so you can look at it with fresh eyes.

Verify numbers, spelling, addresses, and check boxes. If something feels off or is confusing, make a note of it to dig into then go back to answering questions and researching.

Pay all of the taxes, interest, and penalties owed to all taxing authorities

When you file your tax return, you are responsible for paying any and all taxes, interest, and penalties that you owe to the proper taxing authorities.

However, it doesn’t matter if you file your return in February, April, or July – for most taxpayers, your taxes will still be due on the tax deadline: April 15.

The IRS lets you pay completely online using their online portal. Most, if not all, states also have an online portal that you can find by searching “(state) online tax payment”

Use the box below to leave any questions, comments, or feedback you have!

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