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Personal Finance Article: Should You Hire a Tax Preparer? PDF Print E-mail
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Written by Steve Burke   
Tuesday, 19 February 2013 13:28

By Jason Alderman

The U.S. tax code grows more complicated every year and currently spans thousands of pages – even government experts can't agree exactly how long it is. So it's not surprising that millions of Americans hire professional tax preparers to complete their returns.

Relinquishing the onerous task of calculating your taxes to a professional may save you time and give peace of mind – they know more about tax law than you do, right? But remember: You're still legally responsible for all information on the return. So if the preparer makes a mistake or intentionally defrauds the government, you'll be on the hook for any additional taxes, interest and penalties – even possible prosecution.

The IRS notes that although most tax return preparers are professional, honest and serve their clients well, taxpayers should use the same standards for choosing a preparer as they would for a doctor or lawyer, and be on the lookout for incompetence and criminal activity.

There are several basic types of tax preparers: certified public accountants, IRS-designated enrolled agents, tax attorneys, storefront agents (think H&R Block) and self-employed preparers.

The first three types must meet their own licensing agency's continuing education and licensing requirements and are bound by ethical standards; they're also the only professionals authorized to represent you before the IRS on all tax matters, including audits, collection and appeals. Others may only represent you for audits of returns they actually prepared. Always ask whether they belong to any professional organizations with continuing-education requirements.

Here are tips for choosing the right tax return preparer:

  • Request an initial free consultation at which you can share last year's return and discuss how your situation has changed.
  • Ask how their fees are determined – some charge by the number of forms (schedules) filed, others by the hour. You might pay anywhere from $100 to many thousands of dollars, depending on the complexity of your situation, where you live, the agent's credentials, etc.
  • One good way to get a sense of fees is to ask what they would have charged to complete your last year's return.
  • Be wary of tax preparers who claim they can obtain larger refunds than other preparers. No one can estimate your refund without first reviewing your financial information.
  • Avoid preparers who base their fee on a percentage of the refund.
  • Consider whether the individual or firm will be around to answer questions about the return months or years after it's been filed.
  • Check their credentials and find out if any complaints have been filed with the Better Business Bureau.
  • Reputable preparers will ask to see receipts and will ask multiple questions to determine whether expenses qualify for deduction.
  • Ask whether your return's preparation will be outsourced, which means your personal information could be transmitted electronically to another firm, possibly outside the U.S.
  • Ask about their experience with IRS audits and what their fees would be to represent you in an audit.
  • Ask their policy for reimbursing you for fines, penalties and interest if it turns out your owe back taxes on a return they prepared – many have insurance for that purpose.

And finally, don't muddy the waters by linking your tax-return fee to buying another product the preparer may be trying to sell, such as a refund-anticipation loan or check, retirement savings account or insurance policy.


Jason Alderman directs Visa's financial education programs. To Follow Jason Alderman on Twitter: www.twitter.com/PracticalMoney.

 
Governor Quinn Encourages Working Families to Apply for Earned Income Tax Credit PDF Print E-mail
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Written by Erin Wilson   
Tuesday, 19 February 2013 13:15

Newly-Doubled Tax Credit Puts More Money in the Pockets of
Working Families

CHICAGO – February 16, 2013. Governor Pat Quinn today encouraged working families across Illinois to learn about how they can apply for newly-expanded tax relief and highlighted no-cost tax preparation services they should take advantage of. The governor continued his drive to get the word out about Illinois’ newly expanded Earned Income Tax Credit (EITC) at Truman College, which serves as a tax assistance center organized by the Center for Economic Progress (CEP).

Governor Quinn fought for and signed legislation in 2012 that doubles the state Earned Income Tax Credit (EITC) over the next two years, which is expected to save working families an extra $105 million a year. The same legislation also benefits all taxpayers by improving the value of the personal exemption by indexing it to inflation. Today’s event is part of the governor’s effort to drive economic growth and support working families across Illinois.

“Empowering working families is essential to growing the Illinois economy,” Governor Quinn said. “We want to make sure to get the word out about how eligible people can apply for the tax relief they deserve.”

The EITC is uniquely pro-growth and pro-family. Available only to workers who are earning income, this tax credit provides incentive to work as well as much-needed tax relief to the lowest-income families. The EITC also generates local economic growth by increasing consumer spending. A 2006 Brookings Institution study found that every dollar a family saves through this tax credit translates into $1.58 of activity in local economies and can help businesses avoid layoffs, hire employees and pave the way for future growth.

The law also improves the value of the standard personal exemption for all taxpayers in Illinois and ties its continued growth to the rate of inflation. The personal exemption will increase by $50 (to $2,050) in tax year 2012, and the value of the exemption will be indexed to the cost of living adjustment each tax year thereafter. The personal exemption change benefits all taxpayers, regardless of income.

Governor Quinn launched EITC.illinois.gov last month to help more eligible families receive tax relief and take advantage of tax preparation assistance.

How to Benefit from the Earned Income Tax Credit (EITC)

To benefit from Illinois’ EITC, also known as the Earned Income Credit (EIC), taxpayers must include it on their tax returns. The not-for-profit Center for Economic Progress (CEP) estimates that between 10 and 20 percent of eligible taxpayers did not file for EITC last year.

To help working families achieve the maximum savings on their taxes, the Illinois Department of Human Services (DHS) partners with the Center for Economic Tax Counseling Project to provide free tax preparation assistance at tax assistance centers across the state. The services are provided free of charge to families making less than $50,000 annually and to individuals with yearly incomes under $25,000. More than 25,000 Illinois taxpayers filed returns through the program in the 2011 tax season, with more than $45 million in state and federal tax refunds returned to clients.

DHS also funds the Tax Assistance Program (TAP) which has nearly 20 locations in Chicago and the suburbs. TAP recruits tax professionals to volunteer to assist low-income families. DHS also works with its clients and those who found jobs and have left DHS programs to educate them about tax preparation programs and ways to ensure they receive the maximum refund on their tax returns.

A list of locations across the state that offer free tax assistance to eligible individuals is attached.

For more information on the Tax Counseling Project, contact the Center for Economic Progress in Chicago at 312-630-0273, or call the toll-free statewide number at 888-827-8511. For information on the Tax Assistance Program call 312-409-1555 or 312-409-4318 (Spanish). Details are also available on the DHS website at www.dhs.state.il.us and the Department of Revenue website at www.revenue.state.il.us.

Information about filing federal taxes online can be found at www.irs.gov.

 

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Cutting Congress' Pay PDF Print E-mail
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Written by Congressman Dave Loebsack   
Friday, 15 February 2013 15:38
At a time when our economy continues to struggle and we face an unsustainable debt, it is more important than ever to hold Washington accountable.  Yet while far too many Iowa families are struggling like mine did when I was growing up, Members of Congress have not seen a pay cut since the Great Depression.  This is simply unacceptable.

That is why I authored the Congressional Halt in Pay Increases (CHIP IN) and Cut Congressional Pay Act.  This initiative would cut Members of Congress’ pay by 10 percent.  It would also repeal the automatic pay increases that currently take place unless Congress votes to stop them.  In these difficult times, it is unacceptable that Members of Congress can automatically receive a pay raise while Iowans continue to struggle and Washington is gridlocked. 

I have long advocated for reforms to force Congress to get its work done and to hold Washington accountable.  That is why I’m fighting to end the pay system that has prevented any cut in Congressional pay since 1933 – eight decades ago. 

I will always fight for Iowans and will continue to work to create jobs, get the economy moving, and reduce the deficit.  There is no better place to start than with Members of Congress’ own pocketbooks.

 
Loebsack: Congress is Once Again Skipping Town at Expense of Iowans PDF Print E-mail
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Written by Vonnie Hampel   
Friday, 15 February 2013 15:25

House Republicans vote to go on nine day recess despite threat of sequester

Washington, D.C. – Congressman Dave Loebsack today expressed dismay that House leadership will allow Congress to go into recess for nine days with the threat of across the board, arbitrary cuts known as sequestration set to begin on March 1st.  This recess leaves only four legislative days to try and find a way to stop these devastating cuts.  Loebsack continues to express his opposition to letting the automatic, across the board spending cuts contained in sequestration take effect.

“It is unconscionable that Congress is taking an undeserved week-long recess when the deadline to avert sequestration is only 14 days away.  I have called on Congressional leadership for months to get to work on finding a solution to stop these arbitrary, across the board cuts,” wrote Loebsack in a letter to Congressional leaders. “There is no reason for Congress to not remain in Washington and work toward a solution.  Iowans expect Congress to work on their behalf, not skip town instead of making the tough decisions needed to avert the real life consequences sequestration will have on the economy, Iowans, and people across the country.  I urge you to keep Congress in session and get to work.”

A copy of the full letter can be found here.

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Governor Pat Quinn Issues Statement on Fifth Anniversary of NIU Tragedy PDF Print E-mail
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Written by Leslie Wertheimer   
Friday, 15 February 2013 14:16

DEKALB – February 14, 2013. On the fifth anniversary of the tragic shooting at Northern Illinois University, Governor Pat Quinn today attended a wreath-laying ceremony at Cole Hall in memory of each of the five lives lost. In 2010, the governor dedicated $8 million through the Illinois Jobs Now! capital program to repurpose and renovate Cole Hall following the tragedy.

Following today's ceremony, Governor Quinn issued the below statement:

“Five years ago we lost five innocent souls in a tragedy that shook our state and our nation. That dark day was full of sadness, fear and despair and we will never forget it.

“But the day after, and every day since, has been filled with hope, strength and compassion. The NIU family came together to mourn those we have lost by celebrating what they brought to our lives.

“We repurposed Cole Hall to ensure it will be a place of learning and achievement for thousands of students for years to come. By supporting each other in good times and bad, we made our community stronger. 

“Today we honor Catalina Garcia, Daniel Parmenter, Gayle Dubowski, Julianna Gehant and Ryanne Mace. May God rest their immortal souls.”

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