Certified public accountants and enrolled agents
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This is a continuation of previous post on choosing a tax preparer.
These are the pros to consider when you’re looking for help with a complicated tax return, year-round tax-planning advice, and someone who might be able to help you need to do battle with IRS. In fact, a CPA or EA can become one of your trusted allies throughout your life. This pro may turn into the sounding board you need when deciding things such as: Should I get a home equity loan? Does it make sense to borrow from my 401(k) savings plan? Would I be better off in a tax-free municipal bond mutual fund or a fund that invests in U.S. Treasury securities?
Certified public accountants who specialize in taxes (not all 400,000 CPAs do) and enrolled agents are similar in many respects. Both have received rigorous training. A CPA must pass a state accountancy exam and then take continuing education classes to keep up. An EA has either worked at the IRS and earned a special license or passed a stiff two-day IRS test. Both can represent you in front of a storefront preparer, because of their training. Figure on spending $200 to $1,000: enrolled agents often charge a little less than tax partners at big-city accounting firms. Many charge by the hour -$75 and up. If that’s how yours get paid, do whatever you can to bring your accountant or enrolled agent organized records. Otherwise you’ll be throwing money away paying the adviser to sort through your receipts and determine which ones are important.
As noted earlier, it’s a good idea to ask friends or business associates for the names of advisers they use. Since there are only about 30,000 enrolled agents in the country, however, you may not know of anyone using one. To get names of enrolled agents in your area, call the National Association of Enrolled Agents at 800-424-4339 or write to the group at 200 Orchard Ridge Dr., Suite 302, Gaithersburg, Md. 20878. Read the rest of this entry »
Face it: filling out your tax return is no fun. First there are the hours of sorting through your records, statements, and receipts to see what you need for your return. Then there is the time it takes to actually sit down and complete the tricky forms, made more complicated by the 1997 tax laws. Once you’re done, you may very well think to yourself, Could I be paying less somehow? A top tax preparer can save you not only some time and aggravation, but probably some taxes, too. That’s why paid preparers complete two-thirds of the nation’s 1040 long forms. In the next topic you’ll learn how to best use a tax adviser and tax software.
Fortunately, managing your finances isn’t something you need to do alone. In fact, you will probably be more likely to reach your financial goals if you hire some crackerjack advisers: tax preparer, insurance agents, one or more lawyers, perhaps a stockbroker, financial planner, or even a money manager. A sharp real estate agent can help you get the best price when selling your home and direct you to suitable shelter if you’re buying (more about finding and using one in Smart Strategies for Buying a House, Condo, or Co-op). Electronic helpers –in the form of computer software and on-line services-can guide you, too.
You may well be thinking, Gee –I sure need a lot more insurance that I have now! Well, maybe, you do. And maybe you don’t. According to the National Insurance Consumer Organization (NICO), a nonprofit group, fully 10% of the $180 billion or so that Americans spend on insurance is unnecessary.
There are many different types of cash-value policies. Among the most common are whole life, universal life, and variable life policies. Here’s how they differ:
Amazing but true: buying life insurance is one of the most important moves you can make to solidify your personal finances, yet it is also one of the most complicated. It’s extremely difficult to compare life insurance policies. On top of that, life insurance has its own jargon that is enough to make anyone head for the aspirin bottle. It doesn’t help, of course, that buying life insurance means coming to terms with your own mortality. Great.
If you own a car or a home, of course, your homeowners and auto policies provide some liability coverage –typically $100,000 to $300,000 for your homeowners policy and about $50,000 for your auto policy. (Renters insurance policies provide some liability coverage, too.) But if you can afford it, you ought to buy additional liability coverage –known as umbrella liability insurance –from a homeowners or auto insurance agent. After all if, say, you or a member of your household cripples a bigwig executive by plowing into him on a ski slope, you could be the target of a massive lawsuit that far exceeds those limits. Or if your teenager throws a party in your basement while you’re away and a friend breaks a leg on the stairs, you could be held responsible and your liability could be enormous.
