Investments & Loans

One of the blogs that I read almost everyday is Darren Rowse’s Pro Blogger. I have learnt alot about blogging from Darren’s site. It is a dream of mine to work from home. And I hope that one day I can do it with blogging.

If you have not heard of problogger it has quite a large community around it.. and every so often Darren runs a “group writing project“. It is essentially like a blog carnival for his readers to submit and have their posts linked to of his site.. but a little bigger. Actually, it usually attracts at least a couple of hundred posts.

Darren is running one at the moment. I would encourage you to check it out.. there is always tonnes of interesting stuff posted.. and many of the writers are very talented.

The theme this time is

Top 5

So, here you have Investments & Loans top 5 essential tips to know before hiring a tax pro.

Get a referral

Ask friends, family, work colleagues. If you are new to an area, to check the states CPA society or Accreditation Council or National Association of enrolled Agents.

Interview Candidates

Although you will be hard pressed to find an agent with time to sit down with you during tax season, you should be able to at least get someone to give you 20 minutes on the phone.

You want to find someone that can explain their services and you requirements in plain english.

Also, check here for a list of questions to ask a prospective tax pro before hiring them.

Watch for Red Flags

Potential red flags include:

(a) talk of cheating the IRS
(b) pushing you to take certain deductions
(c) promising a return that is a defined percentage of your income
(d) encouraging you not to declare certain income
(e) agent fees being a percentage of what you get back (they may be more inclined to bend the rules)

Mention any special circumstances

Let the person know about anything that may have an effect of you return. Examples include recent divorce, lump sum payments and changes in your work situation (starting your own business or returning to salary work)

Pick your preparer

At some point you have to “bite the bullet” and just hire one of the professionals you have interviewed. You want to make sure the person you are hiring is going to be around in months, years even, after your return has been lodged.

Other tips

1. Do not sign a blank return
2. Try to bring your papers in to the agent in a reasonable state.
3. Compile summaries of your income, expenses, cost of investments sold
4. If you cannot afford a tax pro, try getting free tax info here and here

Reference: Kiplinger

Kevin at Kiplinger has posted a list of the 13 most overlooked tax deductions:

1. State Sales Tax
2. $250 educators expense
3. College tuition
4. Student Loan interest paid by Mom and Dad
5. Out of Pocket charitable contributions
6. Moving expenses to take first job
7. Military reservists travel expenses
8. Child-care credit
9. Estate tax on income in respect of decedent
10. State tax you paid last spring
11. Refinancing points
12. Reinvested dividends
13. Jury pay paid to employer

Check the details –> here

Erin Bunt of Kiplinger.com says that one of the smartest moves any young person can make with their money is to start a Roth IRA. I will push that right over the top today and declare EVERYONE should have a Roth IRA.

Why?

Two reasons:

1. It is tax free
2. Roth IRA is flexible
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If your tax return is becoming more complex or you have started a business, or you do not have the time to do your own taxes, it is probably time to start looking for a tax pro.

Here is a list of 7 questions from Kipling to ask you prospective tax pro, before you hire them:

1. How Long have you been in practise?

Kiplinger suggests this is good because they can anticipate problems with your return and with be able to deal with IRS changes, because the will have experienced them in the past. He suggests several years is a good guide.

2. What are your credentials?

Kiplinger jokes here that anyone can hang out a sign and claiming to be a tax preparer, because their are no licensing requirements. So, he suggests you need to look for an enrolled agent, accredited tax adviser (ATA), certified public accountant (CPA or CPA/PFS). Only CPA can hold the personal financial specialist designation/specialty. (It is also good to check if they are a member in good standing of an appropriate professional association)
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ARE YOU BETTER OFF INVESTING YOUR MONEY?This is a question I have pondered for some time.. for different reasons. I have always wondered if you would be better off, from the purely financial stand-point, just renting your whole life and investing your money.

On the other hand there is an obvious psychological advantage to owning your own home. As Paul Ahearne is quoted in the money article.. Australia (and the USA) is one of the few countries where the word renting is always preceeded by “just”!

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Sounds like a simple enough question?

But, do you know the answer?

Generally speaking in the United States and in Australia the answer is no. But, there are some important things to know listed below:

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