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What Is a Tax Consultant & Why You Need One

What Is a Tax Consultant & Why You Need One

When you think of a tax consultant, what do you envision? A service for the rich and wealthy, right? Something you don’t need to bother yourself with?

This could not be further from the truth! For most people, filing taxes is one of the most daunting tasks they have to do. The fact that tax laws change so frequently doesn’t help at all. Most business owners are unaware of all the rules that govern credits, reportable income, deductions, and more.

As a result, they make mistakes that result in underpayment of taxes, which leads to an IRS audit, fines, and penalties. Others end up overpaying their taxes and saving all the money that they could. This is where the services of a tax consultant come in.

You’ll undoubtedly have to spend some money to hire a tax consultant, but the money they’ll help you save will be well worth it.

What Is a Tax Consultant?

Also known as a tax advisor, a tax consultant is a professional that specializes in tax laws.

They offer financial-related counseling and advise clients about income tax returns, trusts, estates, and even retirement taxes. Tax consultants constantly update themselves on tax requirements at both state and federal levels.

Tax consultants are also responsible for helping clients reduce their tax liability and advising them about it. They have excellent verbal and written communication skills, and they incorporate current tax law findings with client information to form the best possible tax strategy for the client.

There’s a difference between a tax consultant, a financial advisor, and an accountant.

Financial advisors and accountants can be tax consultants, but they may not choose taxation as their primary focus. Tax consultants, on the other hand, are specifically trained in tax laws, and they are well aware of all the federal and state regulations involved in filing taxes.

Tax consultants mostly work for public accounting firms, financial consulting firms, and government agencies. With the advancement of technology, some consultants are also working online.

Who Needs a Tax Consultant?

Anyone can use the services of a tax consultant, from individuals to families, businesses, corporations, and organizations.

Most people would benefit from hiring tax consultants, but it’s especially important under certain circumstances. People who have complicated tax lives would benefit from these services.

For instance, if you run your own business, have an active investing portfolio, or work and live in different states, tax laws can be too much to deal with, if not completely confusing. If you get income from rental properties, real estate transactions, stock options, self-employment incomes, and the like, you most certainly need a tax consultant.

Working hand in hand with a tax advisor can be a smart move if you go through a major life experience. For instance, if you get married, divorced, adopt a child, buy a home, or receive an inheritance.

What Are the Benefits of Hiring a Tax Consultant

Tax consultants keep up with tax laws at the local, state, and federal levels, something you may find hard to do.

If you own a business, filing your taxes can be daunting, especially when you factor in things like sales taxes, which have to be returned several times annually. Trying to file your own taxes may be penny-wise, but pound foolish.

With a professional tax advisor, you’ll have a better understanding of your tax deductions and advice about making strategic investments that will help you avoid tax liabilities. An expert tax consultant will not only advise you on how to effectively save on taxes, but also improve your financial portfolio.

Most people file taxes at the end of each year, and it takes a lot of effort to ensure that everything is filed correctly.

You’d be surprised at the number of businesses fined for making tax mistakes or penalized for not filing on time. With a tax consultant, you don’t have to go digging up all your files, and double-checking everything is okay because they’ll do all that for you and on time. This means you’ll place your focus elsewhere.

How to Hire Tax Consultant

If your tax requirements are relatively simple, you may want to hire a tax preparer instead of a tax consultant. On the other hand, if your taxes are bound to be complicated, consider hiring a professional enrolled agent.

Enrolled agents are tax professionals licensed by the IRS, and they qualify to represent you before the IRS in case of an audit. Finding the right professional can be a daunting task in itself.

So, how do you go about it?

1. Ask for Recommendations

As for a recommendation from your friends and colleagues, then narrow down the list you get to about three candidates. Do interviews and ask the right questions before you finally settle on the right one. Try not to do interviews during tax season because most of the best ones will be busy to engage you. 

2. Ask for Credentials

It would help if you had someone who’s willing to listen and understand your needs.

Ask to see their credentials and inquire whether they have a specialty just in case what they do is not what you need. Ask if they’ll personally handle your cases or hand it off to other associates and whether they can represent you before the IRS.

Stay clear of tax consultants who charge based on your refund as they may bend some rules to get more. If they talk about cheating the IRS and tell you that you can evade certain taxes, then you undoubtedly need to stay away from them.

Ask for licenses, affiliations, referees, educational background, and certifications. Check them on the Better Business Bureau or the state board of accountancy.

Tell Them Your Needs

If you have special circumstances, this is the best time to mention them, so if you recently went through a divorce or a large payment from your retirement plan, tell them about it because it affects your taxes. 

Hire Tax Experts Today

Tax consultants have extensive knowledge about tax laws and codes, which makes them important.

In general, you may not need a consultant, but ask yourself how much you’ll benefit from having one. If you want to make smart financial decisions when it comes to taxes, then a tax advisor is your best bet.

Are you looking for a professional tax consultant, or tax information, kindly get in touch with us or go through our website for more.


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