Dec 10, 2012

Reasons Why You Should Love Enrolled Agents: Patrick W. O’Hara, EA

Just in case you didn't know (and I will keep reminding you).... Enrolled agents (EAs) are America's Tax Experts. EAs are the only federally licensed tax practitioners who specialize in taxation and also have unlimited rights to represent taxpayers before the IRS.
Let’s show how passionate Enrolled Agents can be. You want passion? I can't hear you. Ok, I give you passion!
Patrick W. O’Hara, EA thought you might want to read this:
The value of today’s tax professional
The work of the income tax professional has changed significantly from when I first started 22 years ago. My first year marked the major transition from preparing returns by hand to using computer software. The returns were printed out neatly, and mailed to the IRS. Then came electronic filing, the revenue anticipation loan, the growth of home-use return preparation software packages, and today, the push for the paperless office.
Should we ask ourselves though, has this technology helped us understand taxation? Or has it dumbed us down in a way? I raise this question specifically because this past filing season, America’s most popular (cloud-based) tax software didn’t even resemble a form. It was just data entry fields. You don’t see the form until you pay, and print it out. I often get people calling my office to verify their self-prepared calculation, because they don’t want to pay the fee until they know it is right. Even though I am generally a nice guy and will help people out when I can, it’s hard to even discern how the bottom line is calculated if you can’t refer to form numbers.
Every American should understand how the income tax system works. It’s fairly simple. All income is taxable unless specifically excluded by the tax code. From our income we can deduct a standard deduction based on our “filing status” or choose to itemize our deductible expenses. Then we deduct our exemptions based on the number of taxpayers and dependents. The resulting taxable income is taxed at the rates prescribed based on filing status. Once we determine the tax, we claim any credits and any tax that was withheld throughout the year. Most of us hope the credits and withholding are greater than the tax because this means we are getting a refund. Refunds are good, although I’ll argue if your big refund is from having too much tax withheld from each paycheck, then you need to spend some more time watching Suzy Orman reruns.
There is no mystique to tax preparation. Anyone can put numbers on a form. I have no fear as a professional letting people know this. But I find taxpayers often have trouble determining some basic issues. Believe it or not, determining their filing status – Single, Head of Household, Married filing jointly, or Married filing separately – can be the biggest hurdle. Choosing whether your dependents may be a qualifying child or a qualifying relative is another issue. These seemingly basics selections determine how much income may be excluded, which itemized deductions may be taken, the tax rate, and which credits are available. If you get it wrong, you could end up either getting too much of a refund, or paying more than you needed to. This is where hiring a tax professional can make a huge difference, saving the client time and money along with reassurance that the return is correct.
Last filing season I had a handful of new clients that self-prepared returns in prior years and were unhappy with their results. When we looked at their returns, we determined they had chosen the wrong filing status. It is very rewarding to find the mistakes where we can go back and file amended returns to get refunds. It is not so rewarding to notify a new client that they filed their past returns incorrectly and may owe money to the IRS. But it is usually better to find the mistakes before the IRS does.
I have found that over the years, some of the greatest value I can provide to my clients is educating them about the tax code and their specific tax situations. If my client will permit me, I actually prefer to go over their return line by line so they understand how the tax is calculated. I often emphasize the importance of tax planning and implementation of tax savings strategies before we file the next years return.
The value of a tax professional far exceeds putting numbers on paper. Today’s tax professional should be one of your most trusted advisors – a value that extends much farther than the software.
Who is Patrick W. O’Hara, EA?
He is the owner of a small tax practice in Salt Point, NY and provides tax consultation, tax preparation and taxpayer representation services. As an Enrolled Agent, he is federally licensed to unlimited practice before the IRS and he is a Fellow of the prestigious National Tax Practice Institute.
How can you contact Mr. O'Hara?
Patrick W. O'Hara, EA NTPI Fellow
CHR Associates

(845) 242-2151 (office)
(855) 309-0281 (toll free fax)

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