Progress 2024 — Finance & Investment

How to choose the right tax preparer

By Kayne Pyatt, Herald Reporter
Posted 3/19/24

EVANSTON — It’s that time of year again, when everyone starts pulling together all of their financial documents from the previous year in order to file their income tax forms before the …

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Progress 2024 — Finance & Investment

How to choose the right tax preparer


EVANSTON — It’s that time of year again, when everyone starts pulling together all of their financial documents from the previous year in order to file their income tax forms before the April 15 deadline. The complexity of your tax situation; major life changes, new business ownership or simply a lack of knowledge about new tax laws makes finding the right tax preparer very important.

There are different types of tax preparers with different qualifications. Only enrolled agents, certified public accountants and attorneys may represent their clients to the IRS on matters such as audits, collection issues and appeals.

An enrolled agent (EA) is a tax preparer, such as an accountant, who has been approved by the IRS to represent taxpayers. An EA must either have prior qualifying employment with the IRS or pass an intensive two-day exam on federal taxation and complete a background check.

To maintain status, they must complete a specified number of hours each year of continuing education in accounting methods and tax regulations.

Certified public accountants (CPAs) have a college degree or the equivalent in work experience. They are licensed after passing a state professional qualifying exam. They are highly skilled in accounting and understand complex tax planning and preparation.

Tax attorneys may charge higher fees than tax preparers but, for taxpayers looking to shelter part of their income legally or for those who need specialized advice on municipal bonds, estate planning and more complex issues, hiring a tax attorney would be advised.

There are also non-credentialed tax preparers who often work part-time or only during tax season, such as preparers at H&R Block and other private entities. These preparers must have an active preparer tax identification number (PTIN) through the IRS and meet other regulations for tax preparers handled at the state level.

The Herald spoke with Evanston accountant Brent M. Liechty with Liechty & Associates, who specializes in tax preparation, payroll and bookkeeping. His office is in the Wells Fargo building at 724 Front St., Suite 409. Liechty said accountants have to take 18 hours of training annually, and a CPA is required to take even more hours. 

“If all a person has is a W-2 form, they can file their taxes online free of charge,” Liechty said. “If they have stocks, bonds and investments, then they need an accountant. Also, if you are head of household, or have dependent children 18 years of age who are attending school or college, then you need an accountant or a CPA. If someone has issues with the IRS, they need to hire a tax attorney.”

Liechty said in the case of parents still supporting children in college, there are two options available when preparing taxes. One is the American Opportunity Tax Credit (AOTC) where parents can get up to $2,500 back on their taxes, but $1,500 of that amount has to be used to offset their taxes owed. The remaining $1,000 is refunded to the parents.

To be eligible for a AOTC, the student must: be pursuing a degree or other recognized education credential, be enrolled at least half time for at least one academic period beginning the tax year, not have finished the first four years of higher education at the beginning of the tax year, not have claimed the AOTC or the former Hope credit for more than four tax years, and not have a felony drug conviction at the end of the tax year.

The other option for parents still supporting children over 18 years of age who are still in school after four years, is the Lifetime Learning Credit (LLC). This also offers a tax credit off of what they owe and also provides for tuition-related expenses.

To claim the LLC, the filer must meet all three of the following requirements: parent or dependent or a third party pays qualified education expenses for higher education; parent, dependent or a third party must pay the education expenses for an eligible student enrolled at an eligible educational institution; and the eligible student is themselves, spouse or a dependent listed on their tax return.

To be eligible to claim the AOTC or the LLC, the law requires a taxpayer or a dependent to have received Form 1098-T, tuition statement, from an eligible educational institution, whether domestic or foreign.

“A parent can also claim the head of household deduction and the AOTC both, if they have a dependent student,” Liechty said. “If the student is also employed, they can file individually on their own earnings. The student’s tax return needs to show the parents are going to claim the student as a dependent by checking that box under standard deduction on the 1040 form.”

Tax preparers can choose either the standard deduction set by the IRS (which increases every year) or they can choose to itemize expenses, donations, etc.

Standard deductions for 2024 fall under three categories. The 2024 standard deduction for married filing jointly is $29,200; the standard deduction for married filing separately is $14,600; and the standard deduction for filing head of household is $21,900. 

If a tax filer chooses to itemize rather than take the standard deduction, it can be quite complicated and requires documentation. For instance, medical and dental expenses, interest paid on home mortgage, gifts to charity (only nonprofits, no political parties), casualty and theft losses, and other itemized deductions all have to reach a certain minimum amount. According to Liechty, those choosing to itemize should consider hiring an accountant or CPA.

“Just be sure to pay your taxes on time, by April 15,” Liechty said. “You can get an application for an automatic extension of time to file your return (form 4868), but you can never get an extension on the payment date.”