Married 2007 Self Employed -MFJ or MFS?

[kEV]

I'm getting ready for 07 tax planning and had a question.

I was married in 2007 and self employed. I made x amount this year and had itemized deductions of about half that for business expenses. Wife works for company that does her tax withholding.

I usually do our taxes but do not know whether it would benefit us to MFJ or MFS?

I am also contemplating going with an accountant as this is getting complicated. Any direction is appreciated.

[erchess]

You definitely do need a professional

because your situation is more complicated than we can help you with on a bulletin board. Broadly speaking there are four kinds of tax professionals.

Unenrolled people in most states do not have to meet any educational requirements to start or continuing education requirements to continue. These people will have the lowest fees and some, perhaps most, are quite competent. Because many are not, however, I would avoid these. By the way this is what you will typically get at the tax prep outfits we all know such as Block, Jackson-Hewett, and Liberty.

Certified Public Accountants have to meet educational requirements just to take the CPA exam, which they have to pass and then they have to do satisfactory work under the supervision of a CPA for a while before becoming certified themselves. During the whole time they have to meet continuing education requirements. The problem I have with these guys is that some of them really focus more on other accounting issues than they do on taxes. On the other hand a CPA who does a lot of tax work and does continuing education about taxes every year could be a great choice. One of these would also be a logical choice if in addition to tax work you need help with other accounting tasks relative to your business.

Enrolled Agents don't have to meet educational requirements before they take their IRS Exam nor do they have to work under another EA for a time after passing before becoming EAs themselves. At the same time they do have to pass a rather stiff exam and nearly everyone who takes the exam has either college level work in accounting and taxation or substantial experience working under knowledgeable people. They also have to do continuing education on taxes every year so they generally know taxes.

A Tax Attorney would be the most expensive but also the very most knowledgeable person you could pick. These people go through College, then Law School, and then do another year of Law School just about taxes, and at some point after their first three years of Law School they pass the Bar Exam. If your tax matter goes to court you will need one of these anyway. If you can afford one this would be a great choice but probably a CPA or EA would do a good job for you. The most important thing is to talk to the individual and make sure you are comfortable with him or her and make sure that you get asked lots of questions about your situation.