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The Complete Guide to Finding Tax Help

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Are you going to file your tax return on your own this year, or will you need a little help? Even if you are doing your own taxes you may find yourself stumped, if for example;

  • There have been some major changes in your life during the last year: divorce, marriage, adoption of a child, for example;
  • You opened, closed or sold a small business;
  • You’re one of the millions of taxpayers who received a 1099-C and can’t figure out how to fill out Form 982 on your own;
  • You had investment gains or losses, or you bought or sold property;
  • You are being audited.

According to the IRS, 56.3% of taxpayers used paid preparers in 2010. That means fewer than half of us complete our tax returns on our own.

If you need help filling out these forms, your first question may be, “How do I find someone to help?” Your second question may be, “How much will it cost?”

Here we outline the various services that may help you, and identify a range of how much it may cost. Price should not be your only consideration, of course. If you face a massive tax bill — as some of our readers do after getting thousands of dollars in federal student loans canceled due to disability, for example, it may be well worth it to dig a little deeper and find a way to pay for qualified professional help.

Free: Tax Help Through Volunteers

VITA: The VITA Program generally offers free tax help to people who make $51,000 or less and need help preparing their tax returns. IRS-certified volunteers provide free basic income tax return preparation with electronic filing to qualified individuals in local communities. VITA sites are generally located at community and neighborhood centers, libraries, schools, shopping malls, and other convenient locations. Find a VITA location online here or call 1-800-906-9887.

TCE: The Tax Counseling for the Elderly Program offers free tax help from IRS-certified volunteers for all with priority assistance to people who are 60 years of age and older, specializing in questions about pensions and retirement issues unique to seniors. Many are operated through AARP Foundation’s Tax Aide Program. Find a TCE location online or call 888-227-7669.

Free — $: Tax Preparation Software

Most of the tax preparation software programs offer a free basic version and then charge fees for additional services such as uploading or storing a previous return, getting help with questions or upgrading to a version that includes support for a small business, for example.

In a recent and thorough review of the best tax preparation software programs, Kari Botkin found that fees ranged from free to $74.95 for a home and business version.

Most of these programs do a thorough job with the most common issues facing taxpayers, including basic returns for a small business. But if you are facing any tricky situations, you may find you need one-on-one time with a tax pro. So don’t wait until April 14 if you are going to use one of these programs to complete your return. Give yourself time to get answers to questions that may arise.

If you do use one of these services you are likely to be hit up with an offer to get your tax refund on a prepaid card. Before you choose that option, check out the fees you’ll be charged for one of these cards.

Free — $$: Tax Preparation Service

At Walmart you can pick up groceries, then file your tax return. Walmart has partnered with three of the largest tax preparation service companies at stores around the country. They offer free refund estimates, basic returns (1040EZ) are filed for free, and tout “low Walmart pricing on other filing types.” This may be a perfectly fine way to complete your taxes if your return isn’t too complicated.

That’s just one example of tax preparation services that are available. They can be found in retail stores, as well as individual offices. Not all service providers are affiliated with “chain” or franchise names you’ve come to recognize. Independent tax professionals may offer help as well.

If you go this route, choose carefully. In 2012, the Better Business Bureau nationwide received 2,748 complaints about tax preparation services and 1,063 against tax consultants and representatives. Taxpayers complained that they were overcharged for services, their returns had preparation errors, and that some or all of their refunds were delayed or not received.

While the IRS is trying to require minimum qualification standards for tax preparers, their effort has been currently thwarted by a federal judge who ruled that they don’t have the authority do so. While your state may set minimum standards for tax professionals, it can be very much a Wild West out there and you should make sure you take the time to check out a professional’s background and qualifications.

Worst-case scenario, a fly-by-night operation can set up shop and steal taxpayer’s identities and their tax returns, creating a nightmare that is hard to unravel.

$$ — $$$: Tax Professional (CPA, Enrolled Agent)

Two of the most popular recognized professional designations may help provide some reassurance that the professional you are dealing with meets minimum standards:

Certified Public Accountant (CPA):  A CPA has passed the Uniform Certified Public Accountant Examination and have met additional state education and experience requirements for certification as a CPA. You can use the AICPA’s tool to find a CPA.

Enrolled Agent (EA): An enrolled agent is a person who has earned the privilege of representing taxpayers before the IRS by either passing a three-part comprehensive test covering individual and business tax returns, or through experience as a former IRS employee. According to the IRS, enrolled agent status is the highest credential it awards. Those who have earned this status must adhere to ethical standards and complete 72 hours of continuing education courses every three years. Use the National Association of Enrolled Agents online tool to find an EA.

$$ — $$$: Tax Attorney

You may need to talk with a tax attorney if you are running into a difficult tax situation such as:

  • You are being audited and there are some questionable or controversial issues;
  • You’re being investigated by the IRS;
  • Tax fraud may be involved;
  • You’re facing a large tax bill you can’t pay;
  • The IRS has already filed a tax lien or is threatening to do so.

One advantage of working with a tax attorney is that your conversations are protected by attorney-client privilege. So if you have a problem that requires discretion, this may be a good option.

“Enrolled agents and CPAs have more experience in tax return preparation than attorneys who practice in the area of tax,” says Lee David Auerbach an attorney with Lee David Auerbach, PC, “however the problem is not in the preparation of your return, it’s in the payment of your tax, and there are very few CPAs and enrolled agents who have any meaningful experience in the collection area. And what expertise they do have is primarily limited to learning on the job.”

Auerbach still urges taxpayers to “do your due diligence” when choosing an attorney just as they would any other professional. And don’t wait. “It’s never too early to get good advice because after you have the problem there’s no way to plan to avoid it.”

Some attorneys who practice tax law may also have expertise in related legal matters such as real estate or bankruptcy. This can be very helpful if you are navigating a situation that may touch upon both areas. For example, if you owe a large amount of back taxes, an attorney who practices both tax and bankruptcy can help you evaluate your options. Or an attorney with experience in both real estate and tax law can help you navigate some of the challenges that arise if you are selling rental properties or if you get a tax bill for a home you lost to foreclosure.

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  • frank

    I payed liberty tax servive to do my taxes last year (over $100.) Was hoping to do them my self this year since they seemed simple enough after looking at the copy from liberty, and I,m currently unemployed. All I have is one W-2 and simple deductions for mortgage interest, taxes, etc. All the websites I,ve looked at seem to only offer free tax service for 1040ex only. Could you recommend any free place (or cheap) to e-file a 1040 return and or what ever I have to file for mortgage deductions.. THANKS AHEAD OF TIME for any and all help you may be able to give. :)

    • Gerri Detweiler

      Have you checked out TurboTax? I believe they should offer what you need.

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  • Donna

    I have read the articles on the 1099-C but wanted to see about some clarification. Around April of last year I did a deed in lieu on my home, and received a 1099-C stating $14,000 in debt discharge. Here is my concern my mortgage statement from 4/14/12 shows a principal balance of $ 131,504.49; unpaid deferred interest $ 8857.93; and Escrow -$ 621.06 for a total of $ 139,741.36. On the 1099-C it shows a fair market value of $ 144,500, so how can I have a debt discharge if the house is valued more than what I owed? Any help you can give would be great!

    • Gerri Detweiler

      Donna – I assume your home wasn’t worth more than you owed on it or you would have sold it and avoided a deed-in-lieu. Am I correct? Then, as you may know from reading our many articles on this topic that you aren’t alone in expressing frustration about these forms. We’ve received numerous complaints about forms that are wrong, too old etc.

      My personal philosophy is to make it as easy as possible on yourself. Fighting the lender to get a corrected 1099-c is worse than fighting city hall as they say! If you qualify for the Mortgage Debt Forgiveness Tax Relief Act, claim the exclusion and be done with it. If you don’t, figure out if you qualify for the insolvency exclusion, and if you do, claim it and be done with it. if you don’t qualify for either, then you may need to get a tax professional involved. You’ll learn more in this article and the articles it links to: What is a 1099-C? Your Top 11 Questions Answered

      It would also be a good idea to report your experience to the Taxpayer Advocate’s Office as they have named these forms one of the top problems facing taxpayers and they need more ammunition to advocate for change.

      Also important: if you find these forms confusing or onerous, please let your elected officials in Washington know. The IRS is a government agency and needs to be accountable to someone on this issue. You might also want to file a copy of your complaint with the Consumer Financial Protection Bureau. Although they don’t handle tax complaints specifically, they may have some regulatory authority over the lender involved. (Plus, they seem to be really listening to problems consumers are facing.)

  • Donna

    I tried selling the house after my divorce in 2009, but with no luck at the time. Last year I had to move for a new job and did not have time to wait for the house to be placed on the market for sale. The mortgage company offered me a deed in lieu to vacate house. Talking with old neighbors the house has never been sold either.

    • Gerri Detweiler

      Donna – I’d still suggest you try to see if you qualify for the exclusions. That will be the easiest way to handle it if you qualify. Hold onto that 1099-c though. It may come in handy if they ever try to come after you for a deficiency. (Unless part of your deed-in-lieu deal was that they wouldn’t.)

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