Research tax preparers before seeking assistance

Question: Should individuals try to do taxes on their own or hire someone else to do them?

Answer: Taxes and tax laws can be complicated. Before you attempt to do your own taxes, you should familiarize yourself with the basics of tax preparation. Most tax programs can walk you through the basics.

Q: What’s the difference between hiring a tax preparer and a certified public accountant?

A: A certified public accountant usually receives a degree in accounting and then must pass a rigorous exam to become a certified public accountant and complete other requirements. A tax preparer’s competency may differ based on experience and other training. With a CPA, you have a base line in that they passed the exam to become certified.

Q: What is the average range in cost for tax preparation?

A: Just like anything, it will vary depending on who or what you are using. You should shop around and determine what is the best price and service for you. Online tax preparation programs can range from free to about $80. Prices at tax preparation offices may differ on how complicated filing your taxes may be. If you have one job, live by yourself and receive a W-2, it would be easier to do your taxes than someone who has multiple jobs, owns multiple properties, etc. 

Q: What resources are out there for people who can’t afford to hire someone to do their taxes?

A: The IRS’ VITA (Volunteer Income Tax Assistance) programs and AARP can do tax returns for the general public for free. These tax assistance programs may have requirements including income eligibility and limitations for the scope of the return. Legal Aid’s VITA program helps low- to moderate-income individuals and families with income less than $48,000 file state and federal tax returns for free. 

VITA services are available in Legal Aid’s Honolulu office on Saturdays from 9 a.m. to 1 p.m., first come, first served. People can also schedule a tax appointment Monday to Friday by calling 527-8050 or going to Legal Aid’s website at www.legalaidhawaii.org. Legal Aid also helps eligible clients with issues dealing with the IRS; call Legal Aid’s Intake Hotline at 536-4302.

Q: How can you differentiate between a legitimate tax preparer and someone who is trying to make a fast buck?

A: This can be difficult to determine as many businesses appear legitimate or friends may even refer individuals willing to help you do your taxes. With anything, it is good to ask and shop around. Ask someone you trust how they do their taxes or ask different tax preparers how much they charge before you commit to one. It is common and legitimate for tax preparers to offer an "advance" on your refund for a fee or percentage. Taxpayers should think about how much they are paying to the tax preparer just to have their money a week early. 

Q: Should you hire a well-known firm, or is it OK to go with a smaller company?

A: A well-known firm might be a little more established and could have more accountability. However, this doesn’t mean that a smaller firm can’t do your taxes. You can ask how long they’ve been in business, what’s the background of the person doing your taxes, and other questions to help you get a better sense of their professional standards.