logo
Finding the right tax preparer: BBB offers tips to help you file this year

Finding the right tax preparer: BBB offers tips to help you file this year

USA Today05-02-2025
Jan Diaz
South Bend Tribune
While many will choose to use an app or purchase tax software to complete and submit their own tax forms, others are in search of some extra help in the form of a tax return preparation service or a tax consultant.
How do you know when to get help with your taxes?
Significant life changes, business ownership, or simply a lack of knowledge about the ever-changing tax laws can make finding a trustworthy tax preparer a good idea. Just like choosing an expert to put a roof on your home is probably a better idea than tackling it yourself, sometimes it just makes sense to hire a professional.
A professional tax preparer is not only familiar with tax laws and how to file but can also help navigate things like deductions, tax credits, and whether a married couple should file jointly or separately.
In addition, a BBB Accredited tax preparer has agreed to uphold the BBB standards to tell the truth, honor promises and be transparent – and most importantly, when dealing with personal information: to safeguard your privacy.
Find the loan that's right for you: Best personal loans
That said, not all tax preparers have the same level of experience and training. Here are tips for finding someone you can trust with your finances and sensitive personal information.
First, it's essential to understand the different types of tax preparers and their qualifications. While all the types listed below can prepare your taxes, only enrolled agents, certified public accountants, and tax attorneys may represent their clients to the IRS on matters such as audits, collection issues, and appeals.
Tax preparers: Thousands of people work as tax preparers in the United States. Some are full-time workers, and others work part-time or only during the tax season. These preparers must have an active preparer tax identification number (PTIN) through the IRS. Beyond the PTIN, regulating tax preparers is done at the state level. Check with your state's department of taxation or revenue to learn more. Most tax preparers are legitimate and competent, but keep in mind that without a national license requirement, they may be working off of their research and experience. Because of this, you should conduct a thorough interview with the tax preparer before hiring them.
Enrolled Agent (EA): An EA is a tax preparer approved by the IRS to represent taxpayers. An EA must either have prior qualifying employment with the IRS or pass a comprehensive IRS test on individual and business tax returns. To maintain EA status, they must complete several credit hours of continuing education courses in accounting methods and tax regulations. An EA may work independently or as part of a firm and specialize in specific areas of tax law. An EA may be a good option if you have a more complex tax situation. However, you'll want to make sure their area of expertise applies to your personal situation. An EA is also qualified to help you with financial planning and give you tips that could help you reduce your taxes in the future.
Certified Public Accountants (CPA): CPAs are licensed after passing a state professional qualifying exam. They are highly skilled in accounting. These skills and qualifications make them good candidates for complex tax planning and preparation ifthey have experience in handling tax matters and they enroll in continuing education programs that keep them abreast of the constant changes to tax laws. If your return is quite complex, a CPA may be your best choice for tax preparation.
Tax returns 2025:Tax help is easier than ever to find online. Should you file them yourself or pay a pro?
Tax attorneys: A tax attorney helps their clients with legal issues related to taxes. They can represent individuals or businesses. Hiring a tax attorney is a good option for taxpayers looking to shelter part of their income legally or for those needing specialized advice on municipal bonds, estate planning, and the like. A tax attorney can also represent clients in tax court and draft appropriate legal documents.
How to choose the right tax preparer:
Choosing the right kind of tax preparer for you will depend on the complexity of your tax situation. After you've decided what qualifications your tax preparer needs, the following tips will help you choose someone trustworthy and competent:
• Review the tax preparer's credentials. EAs, CPAs, and tax attorneys are qualified to represent their clients to the IRS on all matters. Other preparers can help you with forms and basic matters but cannot represent you in case of an audit. Don't be afraid to ask about these or other qualifications before you hire someone.
• Be wary of spectacular promises. If a tax preparer promises you larger refunds than the competition, this is a red flag. Some tax preparers base their fees on the amount of your return and may be likely to use shady tax preparation tactics. In addition, you might want to avoid tax preparers who offer "refund anticipation loans" as you could lose a large percentage of your return to commission fees. Read the fine print!
• Get referrals from friends and family – and BBB. One of the best ways to find a trustworthy tax preparer is to ask your loved ones for recommendations, and another is to check your Better Business Bureau. Check BBB.org, paying careful attention to other consumers' reviews or complaint details. This research will give you a clear view of what you can expect.
• Think about availability. If the IRS finds errors in your tax forms or decides to perform an audit, will your tax preparer be available to help you with the details? Find out whether you can contact the tax preparer year-round or only during tax season.
• Ask about fees ahead of time. Before you agree to any services, read the contracts carefully and understand how much the tax preparer charges for their services. Ask about extra fees for e-filing state, federal, and local returns and fees for any unexpected complications.
• If things don't add up, find someone else. If a tax preparer can't verify their credentials, has a record of bad reviews from previous clients, or their business practices don't seem convincing, don't do business with them. Remember that if you hire them, this individual will handle your sensitive personal information – information you need to keep safe from corrupt or fraudulent tax preparers.
For more information and to learn how to protect yourself, Google 'BBB 10 Steps to Avoid Scams.' If you spot a scam, whether you have lost money or not, report it to BBB's Scam Tracker at BBB.org/ScamTracker and the FTC at ReportFraud.ftc.gov. Your story can help protect consumers from similar scams.
Jan Diaz is the President/CEO of the Better Business Bureau serving Northern Indiana, which serves 23 counties. Contact the BBB at 800-552-4631 or visit www.bbb.org.
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Trump floats 'no tax on capital gains' for home sales. Here's who could benefit
Trump floats 'no tax on capital gains' for home sales. Here's who could benefit

CNBC

time2 hours ago

  • CNBC

Trump floats 'no tax on capital gains' for home sales. Here's who could benefit

President Donald Trump on Tuesday said the administration is considering ending capital gains taxes on home sales to boost the housing market. When asked about the idea in the Oval Office on Tuesday, Trump told reporters, "we're thinking about that." "If the Fed would lower the [interest] rates, we wouldn't even have to do that," he said. "But we are thinking about no tax on capital gains on houses." Under current law, home sellers can face capital gains taxes once profits exceed $250,000 for single filers or $500,000 for married couples filing jointly. More from Personal Finance:Trump's 'big beautiful bill' created a new student loan plan: What to knowAffordable Care Act health plan enrollees could face 'subsidy cliff' in 2026Trump's 'big beautiful bill' includes these 2025 tax changes Trump's comments come roughly two weeks after Rep. Marjorie Taylor Greene, R-Ga., introduced the No Tax on Home Sales Actto eliminate capital gains taxes on primary home sales. "Homeowners who have lived in their homes for decades, especially seniors in places where values have surged, shouldn't be forced to stay put because of an IRS penalty," she said in a statement. "My bill unlocks that equity, helps fix the housing shortage, and supports long-term financial security for American families." However, the proposal could be costly, and it's unclear whether the measure has broad Congressional support, experts say. "I think this could generate some interest, but they're more likely to raise the exemption than they are to eliminate the tax entirely," Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center, told CNBC. Enacted in 1997, the $250,000 and $500,000 capital gains exclusions — which apply to primary home sales — have never been indexed for inflation. Since 1997, the median home sales price has climbed by nearly 190%, from about $145,000 to roughly $417,000, as of the first quarter of 2025, according to Federal Reserve data. As home values rise, certain individuals, such as long-time homeowners, are more likely to exceed the $250,000 and $500,000 thresholds, which could trigger capital gains taxes, experts say. When home sales profits exceed $250,000 or $500,000, capital gains are levied at 0%, 15% or 20%, depending on taxable income. Excess profit above those thresholds can also trigger the so-called net investment income tax of 3.8%, depending on other investment earnings, according to the IRS. Some 29 million homeowners (34%) could exceed the $250,000 threshold for single filers, and 8 million (10%) could be above the $500,000 limit for married couples filing jointly, according to a 2025 study from the National Association of Realtors, or NAR. The organization has long advocated for capital gains reform for home sales. Homeowners in states like Washington, California, Utah and Massachusetts are more likely to be impacted, according to NAR data. However, many homeowners don't realize it's possible to reduce your home sales profit by adding so-called "capital improvements," such as home renovations to the original purchase price, experts say. If capital gains taxes for home sales were eliminated, the measure would primarily benefit sellers who are older and wealthier, according to an analysis released Tuesday from The Budget Lab at Yale University.

What Trump's New Tax Law Means for Upper-Middle-Class Families in 2025
What Trump's New Tax Law Means for Upper-Middle-Class Families in 2025

Yahoo

time5 hours ago

  • Yahoo

What Trump's New Tax Law Means for Upper-Middle-Class Families in 2025

President Trump signed his 'One Big Beautiful Act' (OBBA) into law and Americans will see sweeping changes to their finances as a result. The final bill includes a senior bonus to help offset Social Security taxes, tax breaks for service industry employees, a bigger Child Tax Credit, but will also make Trump's Tax Cuts and Jobs Act of 2017 (TCJA) permanent and cut funding for Medicaid and Medicare, per the Center for American Progress. Read Next: For You: While the bill has been touted as a way to offer financial relief to Americans, it doesn't exactly give much help. 'This thing is mostly smoke and mirrors for upper middle class families (that $117,000 to $150,000 range),' said finance expert Andrew Lokenauth with Be Fluent in Finance. 'You're not getting hammered, but you're not winning either.' Here's what Trump's new tax law really means for the upper-middle class, according to tax and finance experts. Increased Standard Deduction The standard deduction is rising to $15,000 for single filers, an increase of $400 and $30,000 for married couples, which is an increase of $800 per the IRS.'This is a big win for families in this income bracket who don't itemize deductions,' said Peter Diamond, a federally licensed tax, accounting, real estate and structure and certified bankability expert.'Most upper middle class taxpayers don't exceed the itemization threshold, especially with the SALT (state and local taxes) cap still in place. The increased standard deduction gives them a bigger automatic write-off, reducing taxable income and simplifying filing,' he according to Lokenauth, that change could cost some taxpayers more. 'If you're in that $120,000 to $150,000 income zone, especially with a mortgage, the loss of personal exemptions and caps on SALT means you're probably paying more now than you did before 2018,' he added. Check Out: Expanded Child Tax Credit The Child Tax Credit was a big talking point for Trump and Vice President Vance. The credit boosted from $2,000 per qualifying child to $2,220 beginning in 2026, per CNBC. Parents must earn $200,000 a year or less or joint filers up to $400,000. 'That means many families in the $117,000 to $150,000 range, who were previously phased out of this credit, now qualify again,' Diamond said. 'For a family with two children, that's up to $4,000 in tax credits, which directly reduces the tax bill dollar-for-dollar.'However, the new revisions are not as good as they seem, Lokenauth said. 'We got the credit — but the alternative minimum tax (AMT) and phaseouts on other things like education credits basically neutralized any real benefit,' he explained. 'The math got messier, not cleaner.' SALT Deduction Cap Remains While there are ways the upper middle class can get a small break, the State and Local Tax deduction cap will not offer relief, according to Diamond. 'The $10,000 cap remains, which hits high-tax states hard,' he said. 'Families in this income range often pay well over $10,000 in combined property and state income taxes, but they can only deduct up to that cap. While some benefits elsewhere may offset this, it's still a frustrating limitation for many.' Mortgage Interest Deduction Previously under the TCJA you could deduct mortgage interest up to $1 million in debt, but it's now been reduced to $750,000. 'For a lot of upper middle class buyers in expensive housing markets (California, D.C. suburbs, New York burbs), this wipes out a big deduction you probably relied on,' Lokenauth explained.'A friend who bought in Westchester with a $900K mortgage was shocked to learn that only a portion of his interest was deductible. He said it cost him over $3,000 in missed tax savings in his first year alone,' he added. 20% QBI Deduction Extended The Qualified Business Income (QBI) deduction — allowing up to a 20% deduction on pass-through business income — has been extended.'This doesn't help W-2 earners, but for anyone in this income range with a side business, real estate rentals or 1099 income, it's a powerful tool. Structuring income the right way could significantly lower their taxable income,' Diamond an upper middle class income sounds great on paper, but it's not the comfortable salary needed to live after taxes and cost of living.'If you're making around $125,000, you're probably seeing some benefit from the current system — lower marginal rates, bigger standard deduction — but you're also losing more in deductions. Especially if you own a home or pay a lot in local taxes,' Lokenauth knowing the tax codes is beneficial and can work to your advantage, Diamond explained. 'The truth is, wage earners will always pay the most in taxes, while asset owners often pay the least. That's how the system is designed — but when you understand the code, you can use it to your advantage instead of being crushed by it,' he added. Editor's note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on This article originally appeared on What Trump's New Tax Law Means for Upper-Middle-Class Families in 2025

Boost Retirement Savings Using Catch-Up Contributions In Your 50s
Boost Retirement Savings Using Catch-Up Contributions In Your 50s

Forbes

time5 hours ago

  • Forbes

Boost Retirement Savings Using Catch-Up Contributions In Your 50s

Boost Retirement Savings Using Catch-Up Contributions In Your 50s Designed to bolster retirement savings, catch-up contributions give you an opportunity to fast-track your financial readiness before you actually retire. Yet many people either underutilize them or overlook them entirely. This article explores what catch-up contributions are and discusses strategies on how to use them effectively. What Are Catch-Up Contributions? These are additional amounts that individuals age 50 or older are allowed to contribute to their retirement accounts beyond the standard annual limits. Introduced under the Economic Growth and Tax Relief Reconciliation Act of 2001, catch-up contributions are intended to help individuals who may have fallen behind in their retirement savings or those who simply want to enhance their financial cushion in the years leading up to retirement. For example, in 2025, the IRS allows people 50 or older to contribute an additional $7,500 annually to their 401(k) or 403(b) plans, beyond the regular limit of $23,500. For those investing in traditional or Roth IRAs, the 2025 limits are $7,000 with a $1,000 catch-up. Making additional contributions to your retirement accounts, even toward your last working years, can significantly enhance your retirement savings, especially with compounding. To be eligible, you must turn 50 at any point during the calendar year for which you plan to make the additional contribution. This means if you turn 50 in December, you're eligible to make catch-up contributions for that entire year. Lastly, you should note that the IRS periodically changes the annual contribution limits for retirement accounts, often to adjust for inflation. Strategies To Maximize Catch-Up Contributions Review and adjust your current monthly budget to make room for catch-up contributions. For example, you can reduce non-essential expenses such as a streaming service or daily coffee runs and funnel the savings to your retirement account. When added together, small changes like these can result in up to $200 to $500 per month redirected to your retirement. If you are following a structured budget, for example the 50/30/20 rule, where 50% of income goes to needs, 30% to wants, and 20% to savings, you may adjust the ratio as you near retirement age to make more aggressive savings, say 50/10/40. Consider also evaluating larger but irregular expenses such as annual vacations, car upgrades, or high-end electronics. Delaying a $3,000 vacation or not getting the new iPhone is a small sacrifice compared to the long-term security you may gain from a well-funded retirement account. If you intentionally reallocate and adjust your budget toward catch-up contributions, you not only boost your retirement savings but also build sustainable financial habits. Over time, these contributions can compound into more savings and lead to a more comfortable retirement. Consistency is more important than intensity when it comes to long-term savings. Automating your contributions ensures that money is directed toward retirement before it is available to spend elsewhere. This pay-yourself-first strategy is especially powerful for catch-up contributions, which may otherwise be postponed or missed altogether. For example, if you are eligible to contribute a total of $31,000 (regular and catch-up combined) to your 401(k), break that amount into per-paycheck installments. Supposing you are paid biweekly, that means automatically deferring around $1,170 from each paycheck, which ensures you reach the IRS limit toward the end of the year. Doing this also effectively applies the dollar-cost averaging strategy, where you make investments at regular intervals, reducing the risk of poorly timed, lump-sum investments. You need not rely solely on your monthly income for funding your retirement savings. Periodic financial windfalls, such as year-end bonuses, tax refunds, or even an inheritance, are excellent opportunities to fund catch-up contributions. Commit a fixed percentage of any windfall to retirement savings. This way, you also reduce the temptation for luxury or impulse spending. For example, earmarking 50% of a $10,000 bonus for catch-up contributions is a great boost, and it may even reduce your tax liability, depending on your retirement account type. Starting 2025, individuals age 60 to 63 who participate in 401(k), 403(b), and governmental 457(b) plans are eligible to contribute a super catch-up contribution, by virtue of the SECURE 2.0 Act. Specifically, the catch-up ceiling is increased to the greater of $10,000 or 150% of the annual regular catch-up contribution (or $11,250 in 2025). This provision is designed to help late-career workers rapidly accelerate their retirement savings in the years immediately preceding retirement. Additionally, public sector and nonprofit employees who have 457(b) plans may qualify for the double catch-up rule, a provision that allows contributions of up to twice the standard limit within the three years leading up to their plan's normal retirement age. Consult your plan administrator to determine your eligibility and ensure compliance. For married couples, coordinating retirement strategies can substantially boost overall savings. If both of you are employed and have access to workplace retirement accounts such as 401(k)s, contribute the maximum allowed amount, including the catch-up. For 2025, that means a combined $61,000 in total contributions. And even when one spouse does not earn income, you can still take advantage of the spousal IRA. The working spouse can contribute to an IRA on behalf of their partner, up to the annual limit, including the $1,000 catch-up contribution if the non-working spouse is age 50 or older. This strategy is particularly valuable for stay-at-home parents or individuals who have paused their careers, allowing them to build retirement savings and maintain tax-advantaged growth. You may also coordinate between making pre-tax or Roth contributions, depending on projected income needs and tax liabilities in retirement. Consult a financial advisor or tax professional for further guidance. Though not traditionally considered a retirement account, an HSA is a powerful tool for those age 55 or older. Once eligible, you can contribute an additional $1,000 per year on top of the standard limits. Used for qualified medical expenses, HSAs offer triple tax benefits: tax-deductible contributions, tax-free growth, and tax-free withdrawals. After age 65, HSA funds can also be withdrawn for non-medical expenses without penalty (though still taxed as ordinary income), making them a flexible retirement source. Despite the benefits of catch-up contributions, many individuals make avoidable errors that undermine their effectiveness. For example, some people assume they can only make catch-up contributions in the year following their 50th birthday, when in fact, eligibility begins in the calendar year you turn 50. Missing that one year can mean thousands of dollars in tax-advantaged savings. Another common mistake is on how contribution limits apply across multiple retirement plans. Many workers invest in both employer-sponsored plans and IRAs but fail to coordinate contributions appropriately. While limits apply separately to different plan types, each has its own rules, and exceeding the limits can lead to IRS penalties or disallowed contributions. Understand your specific plans and seek professional guidance if necessary to ensure compliance. Other common mistakes involve not knowing the difference between Roth and traditional plans, assuming employer match applies to catch-up contributions (they usually don't), neglecting the special super or double catch-up in some plans, and not making catch-up contributions altogether. Many savers also do not review and adjust their contributions based on salary increases or inflation-adjusted IRS limits. This leads to leaving money on the table and missed growth opportunities. Catch-up contributions are most effective when implemented within a broader retirement strategy. And you don't need to do things alone. For example, a qualified financial advisor can help you determine whether pre-tax or Roth contributions make more sense based on your income trajectory tax purpose, and overall plans. They can tell you about the nuances of spousal IRAs or assist you in realigning your budget. Advisors can also identify opportunities for tax-loss harvesting, Roth conversions, Social Security optimization, estate planning, and other strategies which can enhance the impact of every dollar you save. If you think you need a financial advisor, don't hesitate to consult one. They can guide you in various aspects of your retirement and overall financial planning. Just remember to vet a potential advisor before signing with them. You can use FINRA's BrokerCheck tool or the SEC's Investment Adviser Public Disclosure website to verify their credentials, certifications, and history. Final Thoughts Catch-up contributions are some of the most underutilized tools in retirement planning. If you are 50 or older, you get an additional opportunity to increase your retirement savings. But like any other tool, their effectiveness depends on strategy, consistency, and informed decision-making.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store