With the proliferation of the Internet and popular tax software options, everyone asks “should I get my taxes done professionally or do them myself?” While painting the back deck may be a great weekend do-it-yourself project, your taxes involve complicated financial and tax codes. As a result, it’s always best to have a tax professional prepare and review your taxes. The following information provides five of the most convincing and awesome answers to the question “Should I get my taxes done professionally?
When it comes to your taxes, it makes dollars and cents to use a tax professional. Simply put, tax professionals know how to ensure you are getting the most bang for your buck. While you may be able to punch numbers into online software, only an experienced tax professional understands what the numbers mean and whether you qualify for tax deductions. On the other hand, tax software programs are not guaranteed in finding every credit and deduction for your situation. In fact, if you have a complicated tax situation, it’s recommended to use a professional tax preparer. Even Brad Smith, the CEO of Intuit (the creator of TurboTax), used a tax professional.
Today’s tax codes and rules have become more complicated and difficult to understand with each iteration. While most tax software suggests this is an easy process, a business owner or individual with multiple deductions will quickly discover this sentiment to be false. For instance, a small business owner that itemizes their deductions must complete and file IRS 1040, Schedule A, C, SE, as well as several other forms. Each of these forms requires boatloads of information from your tax records, such as numbers listed on 1099-INTs. Effectively navigating your way through these dense and complicated tax returns is a time consuming and arduous process. With all of these factors and forms considered, the risk for error exponentially increases.
However, when you hire a tax professional, they will significantly ease the burden. Tax professionals live, breathe, and sleep tax laws. As a result, these professionals will be able to easily find the right credits and deductions as well as provide advice on particular tax issues. For example, while you may be eligible for both the education credit and tuition credit, you can only use one. Your tax professional will help you make the most financially sensible decision.
For your benefit, the IRS compiles a list of the most typical and common income tax preparation and filing errors. Some of the most common items on the list are entering payments on the wrong line, determining taxable income, and simple math errors. In the best case, an error on your income taxes will delay your return for a few weeks or months. However, if you make a mistake that results in you having a tax liability, you will accrue fines and interest from the actual date you filed your income taxes.
When you sign your return and file your taxes, you declare your information is accurate and true to the best of your knowledge. In the event the IRS audits your return and finds errors, you could face serious penalties. However, when you use a tax professional, you add a significant level of safeguard. Although no professional tax accountant is perfect, you will significantly reduce the chances of error when you use a professional tax service.
Just as your mechanic knows the history of your vehicle, one of the top reasons you should use a tax professional is to develop a relationship. Your professional will understand your business or family’s financial situation as well as future goals. At the same time, your tax professional will be able to make suggestions that even the best and most comprehensive tax software can’t comprehend. For instance, a tax professional will be able to provide insight on ways to reduce capital gains tax or innovative ways for you to save money on your child’s education.
In 2007, the Internal Revenue Service estimated the average individual spent a staggering 24.2 hours finishing their tax return. While this number is large, it took individuals with complicated issues such as a Schedule E for rental properties or a Schedule C for business even longer at 52.2. Assuming time is actually money and the average individual’s time is with at least $25 an hour, it could cost the average person up to $1,305 to file their taxes on their own. The better alternative is to use a tax professional who will quickly and efficiently save time and the overall headache of the task.
While some things are great do-it-yourself projects, this isn’t the case with your taxes. It’s best to contact an experienced and professional tax accountants at Dennehy CPA, so you’ll know your taxes are filed properly.
We at John F. Dennehy CPA are a team of certified public accountants who service clients throughout Long Island. The services that we provide are comprehensive, and we can resolve multiple accounting needs for a client.