If you’re like most Americans, you dread the annual period known as “tax season”. Adding up all those receipts, itemizing deductions, and accounting for all your yearly expenses is a painstaking and tedious task. Enlisting the help of a seasoned tax preparer, however, can make this process nearly pain free and is well worth the costs due to the likelihood of a greater refund.

As specialists in the specific laws, guidelines, and loopholes that can be found in the complicated U.S. taxation system, qualified tax preparers stand a greater chance of helping you optimize your annual tax return. In fact, according to the Government Accountability Office (GAO), an average savings of $438 is found through the use of a licensed tax preparer versus do-it-yourself filing. 

Perhaps the greatest way licensed tax preparers can help optimize your tax return is by helping you itemize your tax deductions, rather than simply listing the standard deduction for your tax bracket. Itemizing each specific deduction allows you to qualify for additional tax breaks that your preparer will identify according to your unique personal information and situation.

Additionally, tax preparers greatly reduce the risk of making errors on your tax form which can greatly affect the outcome of your return. See below for a list of the most common tax return errors a licensed tax preparer can help eliminate:

• Claiming the Wrong Filing Status: Claiming the wrong status could ruin your eligibility for the child tax credit, the earned-income credit, and exemptions for dependents.
• Omitting or Using Incorrect Social Security Numbers: The Social Security numbers you list for your dependents, the earned-income credit, and the child tax credit must match your dependents’ Social Security cards. Otherwise, the IRS will reject your credits and deductions.
• Failing To Use Correct Forms and Schedules: Think of the IRS as a vast bureaucracy that responds to the directives of an outdated computer system for audit direction. Using the correct forms for all your deductions is crucial for an optimal return.
• Failing To Sign and Date the Return: Technically, if you don’t sign the return, you haven’t filed. And, if you haven’t filed, you’re going to be subject to all kinds of penalties, not to mention interest on any amounts not paid in full. Don’t forget, both spouses MUST sign a joint return.
• Claiming Ineligible Dependents: When the IRS started requiring Social Security numbers for claimed dependents, millions of dependents disappeared. In any case, the qualification criteria to claim a dependent are very specific.
• Not Using the Earned-Income Credit: Unfortunately, because it is one of the most convoluted provisions in our tax code, the IRS reports failure to claim the earned-income credit as one of its top taxpayer mistakes.
• Failing To Report All Income: Not all income is reported on a W-2 form or a 1099. The fact that there’s no reporting to the IRS doesn’t prevent the agency from auditing your receipts and reconciling your bank deposits with your reported income. Unreported income can even lead to civil and criminal sanctions.
• Failing To Check For the Alternative Minimum Tax: The AMT, or “Awfully Mean Tax” as the industry refers to it, was created to catch high-income taxpayers who used allowable deductions and credits to greatly reduce their tax liability. Unfortunately, because it hasn’t been updated to reflect inflation since the original bill was passed, the AMT was projected to hit about 19 million families in 2007.

In addition, most reputable tax preparers offer some form of protection or guarantee of an accurate return. Coupled with increased chances for a greater return, the use of a licensed tax preparer can have huge returns for most individuals and families.

This article is for informational and educational purposes only.  It is not intended to provide legal, tax or financial analysis.  Please consult your attorney, accountant or tax advisor if you have legal, financial planning, or tax related questions.

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