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Choosing A Preparer For Your Tax Situation

stressed out trying to find the right tax preparer?The choice of a tax preparer is not easy. All preparers are not capable of handling all tax situations. The choice of a qualified tax preparer is very dependent on your financial activities and types of income.

See how to match the preparer with the situation.

If your incomes are Level 1. 

Basic tax situation, incomes from employment (W-2’s not 1099-Misc), interest and/or dividends (under $400), unemployment, and taxable pension payments. You could have simple itemized deductions

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If you have moved up to Level 2.

You have a similar situation to Level 1 but may have a small business, larger interest or dividends, medical savings accounts, and other tax sensitive activities. Preparers at this level pay little or no attention to your overall financial world.

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When your activities reach Level 3 you are at the Limited Plan level.

You have a significant business or investments. Your tax advisers have focused on developing a coordinated set of tactics within the taxpayer’s business without regard to other parts of their financial world.  Lack of attention to the total financial world can result in conflicts and shortfall, in overall tax savings.

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When you have significant financial activities you reach Level 4, the Planned Level.

Here you have a number of financial activities that could include a business and a variety of investment activities. You and your tax advisers develop a coordinated tax strategy for all parts of your financial world and its entities. Level 4 preparers handle known tax aspects of the activities in this financial world, but make no recommendations for further tactics that may be available. 

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You have reached the take charge Level 5, the Magic Level. 

You and your advisers create an ongoing tax strategy that covers all parts of your financial world and may include addition of new entities or deletion of existing entities as mechanisms to reduce tax.  Planning includes in-depth review of the operations of entities with emphasis determining tax results. Changes and modifications of entities in your financial world are recommended when taxes can be reduced.

Your Tax Preparer Options ...