Last Updated: March 10, 2023
With great tax needs comes great responsibility. But free tax advice is a real option.
The daunting task of preparing and filing taxes can be stressful and confusing. Fortunately, there are many helpful (even free) tax aid options to choose from in order to understand the process.
In this article, we’ll look at:
- Different types of taxes
- How and where to find free tax consultation
- How to spot a tax professional and FAQs.
What You Should Know About Taxes
Taxation is a key part of the social contract between taxpayers and the government. To put it simply, we work, get paid, and give part of our money to the government.
Taxes are so complicated because there’s no one-size-fits-all procedure.
Taxes break down into several categories:
- Taxes on what you buy
- Taxes on what you earn
- Taxes on what you own
Consumption tax is levied on the money you spend, not your income, e.g., taxes for specific goods, such as alcohol.
The amount of tax you pay depends on whether that commodity is considered a luxury item (e.g., jewelry) or a necessity (e.g., food).
Do you have questions about a certain tax or free consultation? Note some various types of taxes below:
A regressive tax is uniformly applied, i.e., both high- and low-income earners pay the same amount.
As such, the regressive tax places a burden on low-income earners because it takes a higher proportion of earnings, compared to high-income households.
For instance, if two individuals each purchase an item of clothing that costs $100.00 one week, they would each pay $7.00 in tax for the purchase. For the first individual who earns $2,000.00 per week, the tax rate on the purchase would be 0.35% of their weekly income. Meanwhile, the second individual would earn $320.00 per week, making the purchase 2.2% of their income.
Inheritance and estate taxes are known as death taxes. While the two taxes are often interchangeably used, the two are not the same.
An estate tax is levied on the total value of the deceased person’s property and money. The state takes the money from the decedent’s assets. The beneficiaries of the inheritance then pay an inheritance tax.
This is where free legal tax advice comes in handy.
Capital Gains Taxes
A capital gains tax is a tax that is applied on the profit from the sale of an asset. It’s always the profit that’s taxed and not the entire amount that is paid.
For example, if you buy a painting for $5,000.00 and later sell it for $15,000.00, you’ll need to pay a capital gains tax on the $10,000.00 you gained.
Income taxes are levied on your annual income. Federal income tax, for example, applies to anyone who earns income in any state of the US.
A progressive tax is a tax where rates increase with income. This tax is higher for people who earn more and lower for low-income individuals.
What are property taxes and how do they work? These taxes are imposed on individuals who own property. Property taxes can be regressive, depending on where the property is located.
Why Do You Need Personal Tax Advice?
Unless your tax affairs are straightforward, you’ll need some help, preferably from a free tax consultation.
Whether you pay taxes (and how much) can depend on a variety of elements and circumstances. Unfortunately, this is not always easy to work out. If you’re not properly informed, you run the risk of either paying too little or too much.
This is where personal tax advisors come into play.
Personal tax advice can save you time, money, and much effort:
- Such advice ensures that you make the most out of loopholes and creates an effective tax minimization strategy.
- It reduces your chances of making errors.
- It helps you take control of your finances in the long term.
Reasons to Consider Personal Tax Advice
A major life event:
If you get married, have a baby, or purchase a new house, your tax situation is likely to change. You could end up in a higher tax bracket because of your joint income with your spouse (find out more about filing jointly or separately here). But you could also benefit from tax deductions because of your new bundle of joy.
A new business or multiple sources of income:
Businesses and individuals are taxed differently. That extra income you earned from your part-time job may be nice, but you’ll probably need to deal with different tax forms. You can find more information on the taxable bonuses and how LLCs are taxed in our articles.
Lack of understanding:
If you don’t quite grasp the tax process, then you’re more likely to make a mistake that will probably cost you in the long run.
While you’re saving on taxes, why not take advantage of free advice on income tax and other tax-related issues?
Expert tax advice does not come cheap. According to the National Society of Accountants (2018-2019), tax accountants can charge a little under $200 for the simplest forms. Consultation fees or overtime work on your taxes can quickly escalate.
Fortunately, spending time with tax advisors doesn’t always have to cost you an arm and a leg.
What to Look for in a Tax Advisor?
Tax advisors are in demand come tax season, but not all advisors are qualified. The Internal Revenue Service (IRS) keeps track of tax scams, some of which have included shady tax preparers.
Obtaining tax advice from a qualified individual who understands the rules is crucial.
Note some qualified advisors below:
Certified Public Accountants (CPAs)
Certified Public Accountants (CPAs) are best known for being experts in tax preparation and planning, but they also provide other means of tax assistance.
CPAs identify with tax advice because they have rich educational backgrounds. They are obligated to complete a four-section program in Accounting at an accredited institution and pass a Uniform CPA Examination in order to receive a license.
Most significantly, state boards require that CPAs have extensive professional experience. If you need a tax consultation—on anything from tax strategies to long-term financial planning—reaching out to a CPA is definitely the right choice.
An Enrolled Agent (EA) is a tax advisor licensed by the Internal Revenue Service (IRS) with virtually unlimited practice rights. They’re the go-to experts for those looking for professional tax advice and tax-preparation services.
Becoming an EA is the highest credential the IRS awards. They represent taxpayers in matters regarding the IRS.
EAs, licensed by the federal government, are required to complete extensive training and testing and can practice in any state of the US. They must stay up-to-date on tax laws and regulations, must adhere to ethical standards, and are subject to regular and stringent IRS checks.
Advisors Available Throughout the Year
When looking for a tax professional, consider whether they can be reliable throughout the year.
There are many seasonal tax preparers, but tax work is an all-year profession. If a tax issue pops up in September, for example, you wouldn’t want to wait until January to resolve it.
If a tax professional is not available, you could always look for other ways to get free online tax advice.
Understand Your Financial Goals
A tax advisor should understand your long-term goals, such as retirement, college tuition, and other personal needs.
Answering Your Tax Questions
A tax advisor should be prepared to explain the simplest and most complex concepts in the tax world. If your tax professional gives you generic statements and leaves you with the same understanding of the topic you had before meeting them, then it’s probably time to look for advice elsewhere.
One sign of a good tax advisor is that they take initiative. Most advisors don’t follow the latest news in this ever-changing world of tax rules and, therefore, don’t know the right questions to ask.
A true tax professional should be able to tell you, for example, if your employer is taking an unnecessary chunk out of your paycheck for taxes or flag taxes withheld.
If you run a small company, you could also ask your tax advisor for some free tax advice for small businesses.
Reliable and Trustworthy
You can’t work with a person you don’t trust, especially when it comes to your finances. Opening the books to your tax advisor means, for example, that they will learn about your income, how much you paid for a house, or how much you paid for a parking ticket last month.
How to Get Free Consultation From a Tax Professional?
Tax advice doesn’t need to be costly. Free help is available for many individuals, especially for low-income earners or military members, and veterans.
If you have an issue like a tricky tax filing or special tax return, here are some organizations where you can seek free tax advice online:
The American Association of Retired Persons (AARP) works with tax professional volunteers who assist individuals older than 50 years of age and those with low to moderate incomes. The association offers services to all taxpayers. Simply book an appointment.
AARP’s volunteers can also prepare your tax return unless your tax situation is unusually complicated.
AARP’s tax-aide service is available throughout the year but is presently limited in services, due to the COVID-19 pandemic.
Tax Counseling for the Elderly (TCE)
The IRS provides free tax advice for seniors through its Tax Counseling for the Elderly (TCE) program. The TCE program is sponsored by the agency and federal grants.
Some TCE sites might also be open to free assistance to younger taxpayers. But keep in mind that they specialize in retirement-related concerns.
TCE services are usually available during tax season, only.
IRS Free File
IRS Free File is a federal grant program that gives taxpayers free filing tax advice, with the help of companies that provide online tax services. Individuals and families can use this option for tax preparations and filing refunds at no cost if their adjusted gross income for the last year was $72,000 or less.
Those with income higher than $72,000.00 can use another free IRS tool: Free File Fillable Forms.
These programs will calculate your taxes, cre2021dits, and deductions and allow you to electronically file your taxes.
Volunteer Income Tax Assistance (VITA)
The IRS-organized VITA is best suited for people who want basic tax preparation help.
These IRS-certified volunteers generally provide free income tax advice for those who annually earn $54,000.00 or less, for disabled individuals, for those with limited English-speaking skills, and for the elderly.
Follow this link to find a VITA location near you.
MilTax Filing Service
This program is for people who are currently serving in the military and families of veterans. The MilTax filing service provides around-the-clock help (via phone), but there are also options to schedule appointments at a VITA location. There’s also an e-filing service that can be accessed during the tax season.
The program also offers free tax filing for veterans.
Do-It-Yourself Online Options
Online tax websites are the answer to your questions about how to do taxes on your own.
Nowadays, there are plenty of tax sites that can calculate your taxes and file them for free, including Credit Karma Tax, Intuit’s TurboTax, TaxAct, H&R Block, and TaxSlayer Simply Free.
Low-Income Taxpayer Clinics
Low-Income Taxpayer Clinics services can be free or low-cost, depending on your income. The clinics primarily deal in disputes with the IRS. Some of the clinics also offer community tax education programs. According to Investopedia, some of these might be better than IRS tax settlement firms.
That’s why these clinics are the best option for tax attorney-free consultation.
Consequences of Taxes Done Incorrectly
There is no specific penalty for making honest mistakes, says attorney David Green.
If you catch your mistake, for example, before submitting your taxes to the IRS, you can refile. If the IRS sends you an IRS CP-2000 notice—flagging unreported income—Green suggests directly calling the agency and paying what you owe.
The IRS also rejects electronic forms deemed to have errors, which allows you to correct your mistake and resend filings. The IRS will decide if intentional mistakes were made in your filing or ascertain if there were unpaid taxes, both of which have legal consequences.
So, it’s best to seek tax help, via a free professional consultation.
What We’ve Learned
Everyone has to do their taxes, correctly.
It’s not just calculating how much you owe; it’s also about the types of taxes you have to pay, whether you qualify for deductions, how much you can save, and planning for your financial future.
Whether you’re struggling with tax forms or just don’t know where to begin, it’s good to know that you don’t have to pay huge amounts for a simple consultation.
Free tax advice is available for everybody—you just have to look in the right places to find it.
Hiring a tax professional can cost between $146 to $457 for basic services. The cost of a tax consultation largely depends on the kind of tax consultant you opt for and the complexity of your legal issues. It can also depend on your income.
The IRS and its programs, such as VITA and TEC, provide free tax advice. MilTax Filing Service is reserved for the military, and the AARP Foundation Tax-Aide is always a good option.
There are plenty of free online tools that can help you calculate and file your taxes. Some of them include Credit Karma Tax, Intuit’s TurboTax, TaxAct, H&R Block, and TaxSlayer Simply Free.