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North Hills Monthly

Taxpayers Looking to Experts for Help with New Tax Laws

Feb 28, 2019 05:27PM ● By April Johnston

Taxes are notoriously confusing, making this time of year particularly stressful. And 2019 may be the most confusing and stressful year yet.

“This year is going to be quite taxing,” said JoAnn Palmieri, the founder and president of Palmieri & Associates, a North Hills-based insurance and tax preparation company.

That’s because this tax return season marks the beginning of the new tax law, the most significant set of changes to the tax code in more than three decades. And it touches nearly every part of the tax return, including brackets, deductions, exemptions and forms.

“It was even a lot for us to learn,” said Bryan Hinds, a certified public accountant at Creese, Smith & Co., who has 30 years of tax preparation experience.

For those who have ever considered ditching the pencil and calculator and having a professional prepare their tax return, this may be the year to make that leap, particularly if you have something new, like the income from a side hustle, or something unexpected, like an inheritance.

It’s those new or unexpected situations that typically spur someone to reach out to a tax professional, said Mike Keefer, a CPA with R.E. Lane in Zelienople. He added that it’s the advantages that keep them coming back.

Among those advantages is knowledge. While most people are just now trying to understand the new tax law, professionals have been preparing for the changes for nearly a year. 

All certified public accountants and enrolled agents are required to meet minimum continuing education requirements to keep their licenses. Enrolled agents, who are licensed by the IRS, must complete 72 hours of continuing education every three years. CPAs, in addition to having earned an accounting degree and passed an exam, must complete 80 hours of continuing education every two years, most of it focused on the tax code.

So the lay tax preparer may not understand the new laws and language, but the professional has not only studied it, but has likely asked the very questions that people are now asking themselves.

A prime example, according to Palmieri, is education. Many people will find that they’re eligible to use both the tuition deduction and the education credit, but they’re only permitted to take one. “A tax professional can tell you which one will be most beneficial to you and save you the most money,” she said.

Saving money is the goal for most taxpayers, which is why many forgo hiring a professional and file the return themselves. They don’t want to incur the cost.

Fees vary from region to region, but in the North Hills’ area, clients with a simple, straightforward return—say, a W2 and a mortgage with investments or dividends—can expect to pay $250 to $350 for federal, state and local filing. Fees go up from there and are based on complexity and the time it takes to complete the return.

But the pros believe that their expertise is worth it, particularly for those who have a complex return, like business owners, or those who have new or unusual circumstances. “Finding one significant deduction can easily exceed the average cost,” Palmieri said.

Of course, cost isn’t the only consideration. Convenience also factors into the decision. Many taxpayers simply don’t want to deal with the headache of purchasing software and spending hours—or days—completing the task. “You have to balance it out and decide what your time is worth,” Keefer said.

The best outcomes for clients, according to Hinds, are usually based on long-term relationships. Those who work with a tax professional year after year can plan ahead, particularly when it comes to withholdings. Showing up with return in hand in the spring may save a headache, but it leaves little wiggle room.

“By the time you’re doing your taxes, your tax planning opportunities are over,” said Keefer. 

And, like any other long-term relationship, finding the right professional is key. “It’s important to find a person who is known and reputable, who has integrity,” Palmieri said. “Ask your friends, ask your family. As with anything, you have to do your research.”

The pros say that it’s imperative to find a tax preparer with the correct certifications, which ensures that they’re taking continuing education classes and staying up-to-date with the latest tax code changes. It’s also vital to find someone you can talk with openly, according to Keefer.

“It’s a relationship business,” Keefer said. “You should like who you’re talking to.”

But if you’re set on going it alone, Keefer, Palmieri and Hinds agree on this: You need to invest in good tax preparation software that can help lead you through the changes and find the correct deductions.

Also, don’t be surprised if you end up with a lower refund than usual. Hinds said that the average taxpayer will ultimately benefit from the new tax laws, but won’t necessarily see that benefit realized in their refund. New withholding tables have made it so that benefits show up throughout the year as a larger paycheck, rather than all at once in the form of a refund.

“Just using round numbers, if you’ve received $6,000 in the past, you may get only $2,000 this year because less tax was withheld,” Hinds said. “Many people are going to be surprised by that swing.”