Protect Against Collisions and More If you drive a car in the United States, liability insurance must cover it. This type of policy pays for medical and property damage resulting from a vehicular accident. You can also purchase comprehensive and collision insurance to cover other costs. These additional coverages help protect the value of your car should it be damaged. If you are calculating how much it will cost to buy a car, you need to take into consideration the cost of insurance as well. In this article, we’ll review the basics of car insurance and the best auto insurance companies in America, including costs, pros and cons. This is a brief introduction to automobile coverage. Liability Coverage When an accident occurs, liability insurance covers you, household members and authorized drivers for the costs associated with property damage and bodily injury. It covers the cost to repair or replace property damage that you caused. [youmaylike] You are also covered if you cause the bodily harm or death to someone else while you are driving the car. This includes medical expenses, loss of income and specified legal defense costs. Collision Insurance If you are involved in a collision, this type of insurance will help pay for repairing or replacing your vehicle. If the collision is your fault, the coverage may extend to other damaged vehicles involved in the accident. States do not mandate that you buy collision insurance, but your lender or car dealer will if you finance or lease the car. Policies offer a range of deductibles, which is how much you’ll have to pay for repairs before the insurance kicks in. Larger deductibles lower the policy premiums but expose you to more out-of-pocket expenses if a collision occurs. Comprehensive Insurance Comprehensive insurance covers damage to your car that occurs for reasons other than a collision, including theft, fire, vandalism, weather and natural disasters. This coverage is often required if you finance your automobile. You can add riders to this insurance to provide coverage of additional costs, including auto towing, glass repair, daily rental while your car is in the shop and emergency roadside service. As with collision insurance, you can set the deductible on your comprehensive insurance policy to cut your premium costs. Gap Insurance If your car is severely damaged in an accident or other incident, you might find that your comprehensive and collision damage won’t provide enough coverage to pay off the amount you owe on the vehicle. Many policies pay only the fair market value of a totaled car, which might be only 80% of the amount you owe. You can buy additional insurance to plug this gap and ensure you can pay off the car loan in full if the vehicle is destroyed or stolen. Normally, car leases require you to buy gap insurance. If you pay cash or pay off your loan, you can save money by avoiding or dropping gap insurance when no longer needed. Top Five Auto Insurers These five insurers all offer full coverage policies and many additional services. Amica Amica is a superstar among car insurers, winning accolades from Consumer Reports and J.D. Powers. It’s known for handling the claims process smoothly. The average annual cost for full coverage: is $1,360. Pros You can have your car repaired at any body shop, without restrictions. Offers a premium package which, for an additional cost, provides full glass coverage, rental coverage, good driving rewards and identity fraud monitoring. Superior financial stability rating from A.M. Best. Cons Missing some discounts, such as military, low-mileage and prepay discounts. Must speak on the phone to get a quote. Sparse website when it comes to customer education. State Farm State Farm is the country’s largest multi-line insurance company. It excels in customer service and regularly garners high marks from customers. The average annual cost for full coverage: is $1,337. Pros Superior financial stability rating from A.M. Best. Excellent online quote tool, getting customers a quote in as little as five minutes. Easy claim handling and top service from its more than 18,000 agents and its easy-to-use mobile app. Cons Doesn’t offer coverage for new car replacements or uninsured motorists. Missing prepayment and automatic payment discounts. The Hartford While only 11th in size, The Hartford is big when it comes to policy options. It offers rates based on your actual driving as well as full replacement of new cars when destroyed shortly after purchase. Average annual cost for full coverage: N/A. Pros Solid benefits, including superior roadside assistance and towing programs. High marks from customers for their purchase experiences. One of the few insurers with mechanical breakdown coverage for out-of-warranty repairs. Cons Mediocre service interaction according to J.D. Power surveys. Sparse online learning materials. Geico Geico is the second-largest U.S. car insurer. It is a favorite among tech-savvy geeks who appreciate the insurer’s mobile app and excellent online service. The average annual cost for full coverage: is $1,627. Pros Geico offers plenty of ways to save, such as multi-vehicle, driving history and vehicle safety equipment discounts. Special savings for active and retired military members and federal employees. Full-featured mobile app for getting quotes, buying insurance, managing your policy, submitting claims, summoning roadside assistance and making payments. Cons Human help may be in short supply, as just about everything is handled online. No gap insurance is offered. USAA No insurer matches USAA for service to military members. Unfortunately, it's only available to active service members, their families and retired veterans. Average annual cost for full coverage: $896. Pros Superior financial stability rating from A.M. Best. Top-ranked purchase experience score from J.D. Power. Cons Missing gap coverage. Doesn’t offer interior vehicle coverage or new car replacement coverage. Limited availability. The Right One for You Competition in the insurance industry helps drive down prices and prompts insurers to offer money-saving features. For example, your carrier might reward you for a safe driving record and for having a long-term relationship with the insurer. The right insurer for you is highly rated for service, offers the exact coverage you want and does so at an unbeatable price. You should always gather multiple quotes before selecting an insurer, and make sure you get credit for all applicable discounts.
Tax Accountant
There are two things in life that you can’t escape: death and taxes. However, you can find professionals who will help you with both scenarios, especially the latter.
Tax is a very real burden in America due to the complexity of calculating how much you owe to the Internal Revenue Service (IRS). The United States is one of the few countries that requires most individuals to submit annual calculations (tax returns) of their income to the government. These self-declaring statements are then matched against the IRS' own records. If they don’t agree with your calculations, you may face some penalties and fines.
Why Hire a Tax Accountant?
This is where a tax accountant may come in handy. Accountants, by definition, are professionals trained in bookkeeping and are qualified to prepare financial statements. Tax accountants are those who are specialized in U.S. tax law. Their main focus is to prepare annual tax returns. They normally hold a special qualification such as a CPA (Certified Public Accountant), attorney or EA (Enrolled Agent).
The CPA certification signifies that the individual has passed the official exam from the American Institute of Certified Public Accountants. By passing this exam along with some requirements, they prove they are qualified for accounting practices.
A tax attorney is not actually technically an accountant. They are a lawyer who is specialized in tax law. Normally, a tax attorney would be useful to argue a specific position on a tax return.
An EA is a tax professional who has passed the Special Enrolled Examination from the IRS themselves. It is considered the highest credential the IRS awards.
Tax Accountant versus Tax Software
Do you need to hire a tax accountant for your entire professional career? Not necessarily. Taxes are something you can do yourself depending on your comfort level with financial terms and calculations. With simpler tax cases (e.g. single, one job, etc.) you can definitely do it yourself and the IRS provides a lot of instructions. There is also a wide range of commercial tax software available to handle more complex financial profiles.
Top tax software includes TurboTax and H&R Block (for more complicated profiles such as landlords and self-employed individuals), TaxAct (for simple profiles) and MyExpatTaxes (for those with foreign income).
So Why Would You Hire a Tax Accountant?
Peace of Mind
While no one can guarantee you 100% accuracy (we’re all human and mistakes happen), by hiring a tax accountant, you will immediately feel a sense of relief that someone qualified is there to represent you.
Consulting
A tax accountant can provide the added consulting element, both on your current financials and on your future plans, especially when you are an ongoing client and build a relationship with your accountant
Support in Case of an Audit
Normally the federal tax statute of limitations is for three years after the due date of your return. This means the IRS can still audit your tax return up to three years after you file it. Being audited by the IRS can be an intensive process involving collecting a lot of financial records, clarifying your position on various claims made in your tax return and answering many follow-up questions. Most tax accountants know the audit process and can provide ongoing support in case of one.
If you decide that hiring a tax accountant will be your preferred option, how do you go about finding the right one?
Finding a Tax Accountant
Tax accountants come in many flavors, depending on what your needs are. They can be sole proprietors, i.e. a one (wo)man band, who tend to have strong relationships with their clients.
Then you have the accountants who work in larger firms, who can normally handle very complex situations, however will also charge larger consulting fees.
Then there are the seasonal tax accountants, who tend to be employed with the large tax preparation firms such as a H&R Block. These are the type of accountants who aim to provide you a quick and efficient experience, as they are normally assigned to a large volume of customers.
The IRS does provide a directory of professional tax preparers here, however it may be easier to do some online research and seek referrals from friends and colleagues.
How to Work with Your Tax Accountant
Once you find your tax accountant, there is still some work to do. These professionals will help you prepare your tax returns; however, you will need to give them the relevant information to do so.
Make Sure You Agree on the Price/Price Range Upfront
Most accountants will be able to tell you the base price, although the final price is normally calculated based on the number of forms filed, which you won’t know until the end.
Have All Your Income Documents Ready
You will normally receive all your tax documents from employers, financial institutions and participating organizations between January and March.
Common forms include:
- W-2 Form: Statement of salary and taxes withheld
- 1099DIV, 1099INT, 1099R: Statements of investment income paid out (div = dividends, int = interest, r = retirement)
Aside from these official forms, you may need to collect additional documentation and receipts of any other income generating activities, such as renting or freelancing.
Ask Questions
Your tax accountant will prepare a financial representation of your life for the government. You should be comfortable and have a general understanding what they are claiming.
Their major value add to a tax software is the personalized consulting they should be able to provide. Typical questions to ask include:
- Are there any special deductions I can claim to reduce my tax bill?
- Is my withholding rate (how much your employer withholds on your income) correct or do I need to adjust something?
- What should I do to save on my taxes next year?
In the end, no one can confirm 100% accuracy so it’s important to always review your tax return before it is submitted.