What is a tax adviser? What are they doing? – Forbes Advisor
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Hiring a tax advisor can be a great way to reduce your tax liability. Even though some people may assume that tax advisors are only for the wealthy, the average American can also benefit from their services.
What is a tax adviser?
Tax advisors recommend strategies to help clients reduce or eliminate tax liabilities. Unlike tax preparers, who only help with the tax return, consultants offer support beyond tax preparation. A tax advisor, for example, can help you locate missing tax deductions or request a reduction in penalties.
More often than not, tax advisors have more education than tax preparers, for example in accounting, business, finance, or tax law. They may also have additional certifications and licenses, such as a Certified Public Accountant (CPA) license or an Enrolled Agent certification.
Tax advisors attend training courses to keep up to date with ever-changing tax laws.
What services does a tax advisor provide?
Tax advisor services go beyond tax preparation. They help businesses and individuals reduce their tax liabilities by giving tax advice and answering tax questions. Plus, they can help clients plan for the future by creating a tax plan for years to come.
Here are some examples of services a tax advisor can provide:
- Minimize taxes by researching tax law
- Reduce previously imposed penalties
- Provide assistance with payment terms, such as an Offer in Compromise or Installment Agreement
- Maximize tax contributions, such as Individual Retirement Accounts (IRAs), Health Savings Accounts (HSAs), and 529 plans
- Analyze different tax scenarios to determine the best tax strategy
- Help take advantage of tax credits and deductions
- Optimize the income or deduction schedule at the end of the year
- Review previous years’ tax returns to determine if they need to be amended
How much does a tax consultant cost?
You should understand the fees of a tax advisor before hiring one. Several factors influence their fees, including the complexity of the tax issue, the time required and their expertise. Tax advisers generally charge by the hour, although some charge a fixed fee.
You can expect to pay between $175 and $450 per hour, on average, if your tax advisor is a CPA.
Steps to Take Before Hiring a Tax Advisor
Do your homework before hiring a tax advisor to make sure they will meet your needs. You can find a good tax advisor by asking for referrals from family members, friends or colleagues.
Many tax professionals belong to organizations that provide ongoing training and ethical guidelines. You can contact one of them to help you find a tax advisor that suits your needs.
Questions to ask your tax advisor before hiring
There are several questions you should ask your tax advisor before making a hiring decision, which may include the following:
Double-check the professional designation and qualifications of your potential tax advisor after interviewing them. By contacting licensing boards, you can check their licenses and certifications. You can also consult the IRS directory of federal tax preparers with selected credentials and qualifications.
Should You Hire a Tax Advisor?
In most cases, you would benefit from hiring a tax advisor. This is particularly the case if you have a complex tax situation or if you owe a large sum to the IRS. With ever-changing tax laws, having a good tax advisor can be an advantage.
More importantly, they could save you thousands of dollars and help you implement a tax plan to minimize taxes for years to come.
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