Income Tax Services: How to Choose the Best

Income tax season is in full swing, which means that you’re likely shopping around for a good tax preparation service. Most towns and cities boast dozens of tax services, so choosing the best one for you can take a little research. Unless you have a regular bookkeeper, you may only know the big names on the block. These tips can help you choose the right tax preparation service for your personal or business income taxes.

Availability

Many smaller tax services are only open from January through April. If you only need assistance with your personal income taxes, those may be just fine for you. Keep in mind, though, that if you’re contacted later about your returns or if you need their assistance during an audit, you may be out of luck if you choose a tax service that pulls in its shingle after April 15.

Qualifications

You need an experienced, qualified tax preparer to do your taxes. While you don’t have to be a CPA to do personal income taxes, a certified public accountant has the education and experience to make sure that you take advantage of all the deductions and exemptions to which you are entitled. In addition, a CPA in a year-round accounting firm will keep up on the latest tax laws and changes to the tax code to ensure that your returns are completed accurately and to your benefit.

Location

A conveniently located office can be a boon if you intend to meet face to face in the accountant’s office. Consider where the office is located and how hard or easy it is to get there if you need to drop off and pick up records and returns.

Reputation

Ask around to learn the reputation of the tax services you’re considering and take the time to check out their credentials. Do the employees have CPA training and certification? Do they offer tax services for income tax season, or do they also provide other accounting and bookkeeping services? Are they listed with the local Better Business Bureau, and if so, what is their reputation and rating?

Guarantee

Some tax preparation services offer guarantees of accuracy. When you’re deciding among tax services, make sure you know what they will do if their error results in fines or penalties, or if you are audited by the IRS. Those factors can help you decide between two or more tax preparation services with similar reputations, availability and pricing.

Pricing

The cost of preparing tax returns varies widely from one tax service to the next. It’s illegal for a tax preparation service to base its fees on the amount of refund they obtain for you. Some accountant offices charge by the hour. Others have a standard schedule of fees based on the complexity of the tax returns and forms that must be filled out. Still others provide a custom estimate and quote for each individual. If your tax situation is very complex, some tax services may have difficulty giving you an exact price before they do a more thorough interview with you, but they should be able to give you a rough estimate of what it will cost to have your taxes prepared.

While it’s tempting to jump at the first tax service advertisement you see, avoid that temptation. Unless your situation is very straightforward, take the time to check out several tax services and choose the one that it the best fit for your situation.

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Boosting the Tax Benefits of Charitable Giving

If you are age 70½ or older, you may have an opportunity to make donations to a qualified charity directly from traditional and Roth IRA distributions. In addition to creating tax advantages, these donations also can satisfy any IRA-required minimum distributions for the year.

How an IRA charitable distribution works

Provisions that allow charitable donations from these plans have commonly been approved as part of the tax law on a year-to-year basis. In many cases, the laws are passed at the end of the year. It’s important to note that Congress is still working on approving these provisions for 2015.

Historically, qualified charitable distributions from IRAs allow donations of up to $100,000 per person. Married individuals filing a joint return can make gifts up to $100,000 donated from each spouse’s own IRA ($200,000 total). People also have the flexibility to give to multiple charities provided that total charitable distributions from an individual’s IRA do not exceed the $100,000 per person limit.

The benefits of an IRA charitable distribution

With an IRA charitable rollover, money moves directly from the individual’s IRA to the qualified charity. This is an important distinction from a direct gift of cash. Some of the benefits include:

• The transfer to the charity directly from your IRA qualifies as your “required minimum distribution” from your IRA for this tax year, if you are distributing from a traditional IRA or an inherited IRA.

• You aren’t required to report the withdrawal from your IRA as taxable income, which potentially reduces your tax burden. Maintaining a lower level of taxable income is particularly important for people in the top tax brackets who may risk being subject to higher tax rates that apply to those above certain income thresholds.

• If you don’t itemize deductions, you still enjoy the tax benefits of a charitable contribution by not having to claim the income that was distributed directly from the IRA to the charity.

Start planning now – contact your financial and tax advisors

There is no guarantee that Congress will approve provisions for IRA qualified charitable contributions again, although if history is any guide, approval to extend the provision for at least 2015 could come before the end of the year. However, you can consider making an IRA gift directly to a charity before Congress works out the final details. Instruct your IRA custodian to transfer money directly from your IRA to a charity or charities following the rules that have existed in the past. If Congress fails to extend the IRA qualified charitable contribution provision, you can still claim the distribution as income and also claim the gift to the charity as a charitable deduction, assuming you itemize deductions.

Now would be a great time to contact your financial advisor to discuss the implications that an IRA charitable distribution can have on your overall financial picture. Also, be sure to check with your tax advisor before you make any decisions about charitable donations from IRAs and to how to properly report them.

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