5 Reasons Why Your Local San Diego Tax Preparer Will Ask For More Tax Preparation Fees in 2022
Has your tax preparation fee gone up this year? Did your accountant or tax professional raise their rates?
I understand that this is a loaded question, but I wanted to offer my insight on why tax preparation rates would be increased. In this article, I’ll cover the five reasons why it will cost you to prepare your taxes more professionally this year. If your tax preparation fee has increased this year, you’ll want to read this article.
If you stay to the end, I’ll give some insider information on why some people are charging more for apparently the same work.
This tax season has been another challenging tax season. I hope you are all in good health and that your tax returns and refunds are filed with your bank.
Personally, I can tell you that I am so busy with tax season that I hardly find time to write these articles. Let’s go to it.
Here are my five reasons why tax preparation fees will cost you more this year.
1. The IRS is a Glorified Train Wreck
Yes I said it. They have entered tax season with a backlog of 6 million unprocessed individual tax returns. They have to deal with the second year of dramatic tax changes. They couldn’t program their computers fast enough, no wonder they are still using computers from the 1960s with some even running the old DOS operating system.
As you know, their funding was cut by the Republicans.
You may remember in 2013 a high-ranking IRS official, Louis Lerner, admitted that the IRS was targeting conservative groups. Well, can you really blame the Republicans for cutting their funding? Like it or not, the IRS has become the payment processor for all things political.
You had stimulus payments, advanced child tax credits, all of which were processed by the IRS. It is another thing that must be properly reported on your tax return.
If not, you will receive a tax notice from the IRS and likely experience tax refund delays. They have been affected by the epidemic like everyone else. Many workers work from home and as hard as they try to help taxpayers, they are simply overworked and understaffed.
If you are looking for a job, they are hiring more auditors. Find out.
The average age of an accountant or tax professional is about 60 years old
2. People have Left the Profession
I can tell you that the average age of an accountant or tax professional is about 60 years old. With the ongoing pandemic changes and dramatic tax laws, many have chosen to retire or retire early.
I also know that some simply did not survive the pandemic, unfortunately. I heard about the great resignation. Although not lost in the tax preparation community, many have chosen to re-evaluate their priorities and seek more meaningful opportunities and employers that align better with their values.
In addition , complex changes to the Covid tax law have been held for accountants to know everything. It has pushed a lot of people out of the profession, and for good reason. It’s no longer fun.
I can tell you from my personal experience, after the end of tax season last year, I felt overwhelmed and thought I might be done with taxes. It’s actually what made me take another stab at writing these articles..
3. Inflation Costs Continue to Rise.
Inflation is also known as a hidden tax for very good reasons. Everywhere you look, prices are skyrocketing on everything from used cars, groceries, office supplies, labor cost, the list goes on.
You can blame uncontrolled money printing, government stimulus programs, supply chain problems, the list goes on. The bottom line is that the prices for everything you use and need are skyrocketing. At first, they said it would be temporary, but that seems not to be the case. Get ready for higher prices across the board. Inflation is here to stay as the value of the US dollar becomes less.
In 2021, the Consumer Price Index, or CPI, increased by 7%. But don’t be fooled. The core CPI figure excludes food and energy. Why is that? I do not know.
Maybe to twist the numbers to make it look better.
Realistically, inflation is much higher. I think it’s closer to maybe 20%. Using the dollar tree, increasing its price from one dollar to one dollar and twenty-five cents as an example.
4. The Workload is Constantly Increasing.
Well, not many tax professionals have raised their rates in the last year by much because despite the many changes in the tax code, including those during tax season, many, like me, thought it would be a one-time event. So we bit the bullet. Soon he realized that this was a huge mistake.
The IRS disaster has been relentless. Some people were receiving mysterious deposits in their bank accounts, while many others were receiving stimulus payments. The IRS often sent out incorrect automated tax notices that even suggested that the tax preparer had made a mistake. Let’s see, we had to navigate the PPP or Paycheck Protection Program, another COVID relief bill later in the year, and we’re still getting new regulations now. And just when you thought things were getting better, Congress tries to pass another bill that affects your taxes again.
Seriously, folks, that’s too much for anyone to deal with, even the hardest working people at the IRS. It made me want to quit smoking. You can usually relax after tax season, but calls and emails don’t stop if you have to respond to a tax notice, and that’s usually done by mail. It takes several months for the IRS to open your mail.
Have you heard of unopened truckloads mailed to the IRS?
Yes, this is a true story. Bottom line, what taxes were a few years ago, it’s very different now.
If you involve someone to prepare your tax return and they prepare your taxes correctly…
5. Customers are More Demanding.
Listen. If you involve someone to prepare your tax return and they prepare your taxes correctly, their job will be done.
They have done their job. Later, if you receive a letter from the IRS, it is generally outside the scope of the original post. Tax officials are not responsible for resolving it for you in their time and expense. Read the letter for yourself and find out what the letter is about. Don’t just send it to the tax agent so they can read it to you and tell you what they’re all about.
I will say this. The IRS was and still sends automated messages that are often incorrect. I had a client ask me to call the IRS on their behalf and find out why they received a mysterious deposit of about $4,000. No, you need to contact them yourself. Which brings me to my advice about why some people pay a premium for the same amount of work.
Among tax professionals it is called a beta tax. Some people have a pain in the ass to work with, so they naturally charge more. Like it or not, that’s exactly the case. If you don’t want to collect beta tax, organize your things and don’t bother your tax officer with many questions and demands and most importantly don’t make them wait. If they ask you something, call or email you, it’s best to respond right away.
Your accountant or tax professional has improved if it is still around, and therefore it should be valued at a higher value. If you can do it yourself with TurboTax, go for it. If you can’t then be prepared and be happy that you still have a motivated accountant or tax professional to do your taxes and accept and estimate the higher tax preparation fees because they are in my opinion worth it.
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