Tax Prep Q&A with Accountants of Color
The tax filing deadline was extended to May 17th this year which has given us more time to procrastinate doing our taxes. Hooray! But the deadline is still coming.
If you feel annoyed and confused about filing your taxes, I’m with you. I always feel like I’m making a mistake or doing something wrong.
I am excited to share a Q&A with some brilliant CPAs to answer all of your questions, but first I want to tell you why your taxes are so complicated to begin with. Tax prep companies like TurboTax (owned by Intuit) and H&R Block lobby millions of dollars each year to keep our taxes complicated. What?!
I know… I felt the same way. Because if filing your taxes was free and easy, you wouldn’t need to pay companies to help you do it. According to NBC, “for many taxpayers, the government already knows your income because your employer sends the IRS your W2's and 1099's. Instead of making you do all the leg work, calculating, writing and erasing, and scrambling to get to the post office on time, the IRS could just send you a prefilled tax form.”
This would save us 13 hours of time and $200 per year (that goes to tax prep companies), according to estimates by the office of Senator Elizabeth Warren. Burning rage!!!
3 ways to file your taxes.
Hopefully we’ll get there someday. For now, here’s how you can file your taxes. If you earn under $72K you can use a tax prep company for free. Didn’t know that either? Tax prep companies don’t want you to. If you earn more than that you can still file your taxes for free using Free File (check out this link).
If you earn more than $72K and aren’t up for doing your taxes yourself, you can hire an accountant. Check out Accountants of Color's directory of BIPOC accountants.
Let me introduce you to Keila and Kelli.
Keila Hill-Trawick and Kelli Loo are two brilliant CPAs and founders of their own accounting firms. They joined together to form Accountants of Color to create a safe space for Black Indigenous People of Color (BIPOC) accountants to engage, grow, and build their firms.
They joined me for a live Q&A to answer the Fiscal Femme community’s biggest tax questions and tell us more about Accountants of Color. You can watch the full Q&A here, but here are a few FAQs:
When do I need to hire an accountant?
Instead of “drawing a hard line in the sand,” they recommend thinking about a few things. First, how complicated are your taxes? If you just have your W-2 salary and that’s it, you might not need to hire someone. As soon as it gets more complicated or you start feeling less comfortable with the different things you need to account for (pun intended), it might be helpful to hire someone. Comfort is important because hiring an Accountant can provide peace of mind. Also, you might not want to file your own taxes. That’s a plenty good reason.
While you might end up paying a couple hundred dollars for an accountant, they can pay for themselves many times over if they find ways you’re overpaying in taxes.
Speaking of comfort, if I mess up my taxes, am I going to jail?
Keila eased our minds - “I would say a couple of things. The first thing is that the media is very good at making us think that people are just out here not paying the right amount of taxes and going to jail…. Jail is not the IRS first line of defense. They do not want to be a law enforcement agency… They would much prefer to have their money than get you locked up.”
She also added that they are looking for fraud, not people who accidentally claimed an extra hundred dollars in meals. If you get a letter from the IRS, respond and pay what you owe.
“What they actually want to see is that you're trying. So if you get a letter in the mail, they want you to respond, acknowledge that you owed them the money, and then try to pay it off.”
Kelli added that the IRS doesn’t go from 0 to 100 (i.e. jail time) if your taxes aren’t correct, it’s a “slow painful process.”
If I want to hire an accountant, how do I choose?
Keila says to start by thinking about what you need. Are you looking for someone to fill out your tax forms once per year? Do you want someone you can talk to year round with questions or if the IRS sends you something in the mail? Some tax firms close after tax season so if you want someone to be available throughout the year, that’s a good question to ask. Also know that it will probably be more expensive for that type of access.
Next, check that the accountant works with people in your similar situation, especially if you’re a business owner. If you have a food blog, you want an accountant who is familiar with that type of business.
Finally, you want to like them. Keila says “this is someone that you’re trusting has your best interest at heart... Find someone you feel comfortable talking to, who talks to you with respect and kindness that doesn’t make you feel like you should know these things.”
YES! No shame from your accountant please.
Check out the full Q&A here!
About Accountants of Color: Accountants of Color was started to create a safe space for Black Indigenous People of Color (BIPOC) accountants to engage, grow, and build their firms. We educate our community to provide guidance, answer questions, share resources and encourage each other.
Accountants of Color's Mission: To empower BIPOC-identifying accountants to cultivate meaningful practices to revolutionize our industry to be accessible and equitable for all accountants and collectively shift professional structures to support social healing.