How to Compare the Costs of Different Tax Preparation Options

Almost everyone who is making money in the U.S. has to pay taxes. The thing with taxes is they are a little complex to prepare, calculate, and file. Some people do their taxes by themselves, some people use tax preparation software, and others hire professional accountants or income tax services to prepare their taxes. All of these options are fine. However, each has its own pros and cons, and you have to choose the right option for you. For example, if you are a salaried employee who is earning income from a single source, you need to file your taxes using a W-2 form. There is no need to hire an accounting firm. On the other hand, if you are a freelancer who is earning income from multiple sources and needs to prepare a tax return with itemized deductions, it is a good idea to hire a specialized accountant for freelancers to prepare your tax returns. Similarly, some DIY taxpayers with reasonable knowledge of tax laws can easily prepare their taxes using tax preparation software.

Have a look at the cost comparison of tax preparation under all three options:

1. Hiring an Accountant for Tax Preparation

According to Investopedia, the average cost of hiring a Certified Public Accountant (CPA) to prepare and submit a Form 1040 and State tax return with no itemized deductions is $176, while the average fee for an itemized Form 1040 and a State tax return is $273. If you are a self-employed individual and need to hire a CPA to prepare an itemized Form 1040 with a Schedule C and a State tax return form, the average fee increases to $457. So you can expect to pay $146 to $457 for your tax preparation.

2. Using Accounting Software

The cost to prepare taxes using accounting software varies from $0 to $130. Some accounting software are free but provide only basic features. For complex tax preparation, you need a premium version.

3. DIY Tax Preparation

DIY tax preparation is almost free. It only costs you time! The IRS estimates that individuals will need to spend approximately 11 hours preparing their own returns in 2022.

Which option(s) do you prefer? Let us know in the comments section below.

Meeting Your Tax Preparer for the First Time? Here's All You Need to Know

 

Choosing the best tax preparer is a challenging task. But once you have completed this process, you will be headed in the right direction. Now, you must plan to meet a tax preparation guide forfreelancers or the self-employed. Usually, people are a bit nervous about their first meeting, and thousands of questions pass through their minds. If you are going through the same phase, then keep reading to learn tips for planning the first meeting with your tax preparer.

 

●      Develop a healthy relationship

If you are a starting freelancer or entrepreneur, try to build a healthy relationship with your CPA. When you work with a person for a longer period, things become smoother and professional relationships may benefit your business. In addition, the experience of your tax preparer will help you to face the various challenges of your business.

 

●      Be honest

When you work with a tax preparation guide for entrepreneurs, you have to be honest. Trust should be the basis of your professional relationship. Share all your records and concerns with the CPA and, if there is any issue, try to find a solution together. Remember, a tax advisor will not judge you, so be open with your problems.

 

●      Keep essential documents

When going to meet a tax preparer for the first time, you can ask them what documents they need. Some essential documents include identification documents, income-related statements, expense-related statements, and tax-deduction documents. If you don't have any of these documents, don't worry: your tax preparer will assist you in dealing with this problem.

 

There is no doubt that taxes are complex, but everything goes smoothly when you find the right person to help you in tax preparation for entrepreneurs. Almost every person is stressed when preparing taxes for the first time, but there is nothing to worry about. Trust your tax preparer, cooperate, and don't panic!

How to Choose a Good CPA for Private Equity Accounting

 

Private equity accounting refers to the accounting operations that ensure the proper record-keeping and financial reporting of private equity firms. Firms, investors, and companies receiving financing must be in compliance with accounting standards issued by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB).

The role of a private equity accountant or income taxs services for small businesses is to ensure smooth accounting operations for all the parties concerned. If you are looking for a good private equity accountant, here are four things that you need to keep in mind:

1. Specialization

The first thing you need to look for is the additional certifications of your accountant that show their specialization in private equity accounting and income tax services. A private equity accountant has expertise in investment fund accounting, corporate finance, and investment banking. An expert accountant with additional expertise helps facilitate dynamic decision-making in complex situations.

2. Experience

Experience plays a key role when choosing a private equity accountant. Look for an accountant that has two to five years of experience in private equity accounting. An experienced accountant has gained practical knowledge by working with clients in different industries, which helps them easily manage their financial accounts and cope with the challenges that come with it.

3. Client Base

Ask about the client base of your target private equity accountant. This will give you some idea about the reputation of the accountant. A good accountant has good clients and, above all, a good client retention rate.

4. Reviews

Read the reviews and testimonials of your target accountant. This helps you get an idea of their reputation. You will find that a good accountant usually has positive reviews and good ratings. It is always a good idea to find references from people that you already know.

If you are looking for any assistance with doing private equity accounting and/or taxes, you can contact Agro Accounting CPA to find answers to your queries!

How to Respond to an IRS Notice of Deficiency

An IRS Notice of Deficiency is official confirmation from the IRS that you have not paid the complete tax amount that you owe to the IRS. This notice is issued to the taxpayer when the information on the tax return filed by the taxpayer does not meet the information provided by the employer or the information collected by the IRS from third-party sources.

When does the IRS issue the Notice of Deficiency?

When the IRS finds any confirmed mismatch or discrepancy in your information, it issues a statutory notice telling the taxpayer to pay additional income tax, which also includes interest and penalties. It is issued if a taxpayer fails to respond to the communication initiated by the IRS in a pre-assessment letter. The failure to timely respond to this pre-assessment letter or 30-day letter results in a 90-day letter, or the Notice of Deficiency. Your Notice of Deficiency includes an explanation of adjustments to the taxpayer and how the IRS has calculated the deficiency.

What to do when you receive a Notice of Deficiency

You have two options to respond to the Notice of Deficiency: either agree to the additional tax liability by signing a Waiver Form 4089 or challenge the tax deficiency in U.S. Tax Court(!)

The applicant has 90 days to file a claim in the U.S. court. The 90 days are counted from the date the Notice of Deficiency was mailed to the taxpayer’s last known address. The IRS cannot collect or perform any assessment unless the 90 days expire or a Tax Court decision is finalized.

If you need assistance with how to respond to your IRS Notice of Deficiency, you can contact the experts at Agro Accounting CPA.

What a Certified Public Accountant Exactly Does

Many people often use the terms accountant and Certified Public Accountant interchangeably. After all, these terms do not matter unless you are looking for something beyond tax preparation. However, if you ever need audit representation, auditing and other attestation services, forensic research, income tax services for small businesses, or anything else that requires a CPA, you must know clearly the difference between a staff accountant and a Certified Public Accountant.

What is a CPA?

CPA stands for Certified Public Accountant. A CPA does much more than taxes. A CPA works with businesses or individuals on auditing, forensic research, financial consulting, investment accounting, tax planning, and much more. A CPA is skilled in various forms of accounting.

How to Become a CPA?

To become a CPA, an accountant has to meet various requirements. The terms and conditions to become a CPA vary from state to state. But still, there are some common conditions that every accountant has to fulfill to become a licensed CPA that include:

• A CPA must have a bachelor’s degree in accounting with at least 150 credit hours
• A CPA must have at least two years of proven public accounting work experience
• A CPA must have passed all four parts of the CPA exam, which is the same from state to state and covers the same topics. The exam includes topics like auditing, financial accounting and reporting, regulation, investment accounting, and more
• Many states have state-specific additional requirements for an accountant to apply for a CPA license, which CPAs have to follow

How to Find a Good CPA?

The best way to find a good CPA is to search online for accountants in your area or seek references from family, friends, and colleagues. Just make sure you perform basic research like checking for a license number, asking about experience, and reading reviews before hiring a Certified Public Accountant.

Agro Accounting CPA is the name to count on for all your accounting needs. If you need any assistance in filing your taxes or bookkeeping, we are here at your service!

How to Respond to IRS Notice CP2000

 

A taxpayer receives the IRS CP2000 Notice when the information provided on a tax return by the taxpayer does not match the information the IRS has from third-party sources. It is also (less commonly) called an underwriter inquiry. The automated system of the IRS sends this notice to the taxpayer when it detects some discrepancies with the tax return. Thus, the notice you receive may or may not be correct. There are three courses of action when responding to an IRS CP2000 Notice:

• You can agree with the IRS CP2000 Notice
• You can disagree with the IRS CP2000 Notice
• You can partially agree with the IRS CP2000 Notice

Here is how to respond to the IRS Notice CP2000:

If you agree with the IRS CP 2000 Notice, you have to respond back to the IRS with the response form and payment (if applicable). You can ask your accountant to respond to the notice for you. The notices from the IRS are not audits, but they work similarly. If you owe any amount to the IRS in taxes, pay it out with the response form and explanation.

If you do not agree to the IRS CP2000 Notice, you can complete and return the response form. There, you have to specify your reason(s) for not agreeing to the notice and supply any documentation to support your statement. If the information reported to the IRS by a third party is not correct, then you can contact the third-party information provider to correctly update it with the IRS.

If you partially agree with the IRS CP2000 Notice, you need to respond via mail explaining your position to the IRS with the required forms and attached documents. You need not amend your return. Just provide the IRS with the right information. If it accepts your explanation, the IRS will update it on its end.

Get in touch with Agro Accounting CPA to get help with your response to IRS Notice CP2000.

All You Need to Know About IRS Notice CP3219A

 

Sometimes taxpayers receive an unexpected letter from the Internal Revenue Service (IRS). Many taxpayers get stressed out by such notices. However, there is nothing to panic about. You should have proper knowledge about IRS notices and the steps you can take after receiving one.

Here we are discussing IRS Notice CP3219A, which is the IRS Notice of Deficiency. In simple terms, this notice indicates that you owe an additional payment to the IRS. In most cases, this situation arises when the IRS receives information from a third party about your income standing.

The good thing is that this notice is really like a proposal. You have the option to agree or disagree with this notice. If you agree, then you can send in the extra payment. But if you disagree with the notice, then you can file a petition. Taxpayers have their own legal rights, and they can take immediate action whenever necessary.