Filing taxes can be both tedious and confusing, especially for non-professional who don’t customarily stay up-to-date with tax code changes. There are many tax laws, and all must be accounted for each time you file to avoid hefty fines or interest on unpaid tax. However, taxes are as inevitable as death, and unfortunately, ignorance is no defense where they are involved.
This is why some people choose to enlist the services of tax professionals or tax preparers during filing season. Apart from that, a helpful tip is to stay prepared for filing by ensuring you keep your bills and receipts for deductible expenses, especially if you run a small business.
If you’re wondering what the value of a qualified tax professional, below is a list of benefits you can enjoy from their services.
According to the IRS, the average consumer spends 13 hours to file their tax returns, although some estimates quote as high as 24 hours. If you’ve tried to do your own taxes, you have probably taken longer than one day to do it, especially if you have a small business or rental income to report.
Assuming your time was worth $20 per hour, you are easily spending $260 and above to file. Because you aren’t conversant with this process, you spend double or triple the amount of time a tax professional would take. The tax preparer works efficiently and does the correct thing on the first try, saving a ton of time and effort.
Cost is Tax-Deductible
If you itemize your expenses, the cost of hiring a tax professional is a deductible expense on Form 1040. Therefore, you end up paying less tax because of this deduction.
As mentioned, filing taxes is a difficult and complicated process. For the average consumer, there are hundreds of details to consider, and it’s very easy to make a costly mistake. What’s more, the Tax Code is updated annually, and you may not be aware of how such changes affect your next tax returns. This gets even more complex if you did any of the following:
- Lost or made money in investments
- Started or sold a small business
- Sold or bought a capital asset
- Bought or sold real estate
- Changed your marital status
- Changed your residence so that your income and residence are now different
A tax professional handles tax matters on a daily basis. They stay abreast of all tax codes and how they affect various consumers. Therefore, they are best placed to advise you on the impact of these changes and how you should file your next returns. Should you choose to do it yourself, always check how such changes affect your next returns.
Finds Relevant Deductibles and Credits
There are tax-deductible expenses and tax credits that most taxpayers qualify for, but the system and common tax software may not be updated on them. Therefore, you lose precious money and end up overpaying your taxes when you don’t claim all your relevant deductibles and credits.
A tax professional is aware of the latest credits and deductibles and how they affect various individuals and businesses. Therefore, he/she can ensure that you take advantage of them to reduce your payable taxes. If you have overpaid in the past, he/she can also help you to file amendments and request for refunds.
Assistance with Audits
Finally, should you ever be audited, a tax professional can work with you and your business to get the relevant bills, receipts and documents to support your returns. He/she can represent you when dealing with the IRS to ensure that you are protected. While only 1 percent of taxpayers are audited, it is best to have a tax professional if you ever land in these murky waters.
Tax accountants and tax professionals are real people, which means you can defer to them with any questions or concerns you have. Before filing your taxes this year, talk to a tax professional and find out how they can help you wade the murky waters of taxation reporting.