There are lots of digital platforms that have made filing income taxes easier for individual taxpayers and their families. The systems designed by top tax companies allow users to plug in financial information and receive accurate calculations on their projected returns. This is a great convenience for some, but it’s not always the better option. You see, as life becomes more complex, so does your income tax return, and the rules to remaining in compliance. Though using a free or affordable online tax program might work for a single individual with no dependents and 1 income source, there are instances in which hiring an expert makes more sense.
When You Have Children
Have you had a child in the last year? Raising children costs a lot of money and the government is aware of this. That’s why they allow parents to deduct and receive credits for raising their children. If you’ve never filed taxes with dependents before, it is best to work with a company for local tax prep. They can assess your expenses and help you determine what can be written off like medical care, childcare, and other costs. They can also help you to obtain credits which can increase your tax return payout.
When you get married, separated, or divorced, your income tax filing process will change. There’s so much you need to know including how you’re going to file like whether you’re married filing jointly, separately, head of household, etc. You’ll need to review joint banking and investment accounts and gather all tax forms and work together to file your taxes. As this can be difficult (especially if you’re separated or divorced), a tax preparer is best equipped to help you navigate.
Starting a Business
So, you’ve decided to branch out on your own and become a boss? That’s all well and good, but you’ll need to file taxes at the beginning of each year on your business. Whether you’re a sole proprietor, LLC, non-profit, or large corporation, you’ll need to account for your business finances. As there are separate deductions and credits for businesses, it’s a good idea to work with a tax expert who can help you avoid costly mistakes and cash in on as many incentives as you can.
Lots of Deductions
Taxpayers are given common deductions by the local and federal government. This is essentially, an estimated total of the average amount to be deducted from your income. If you have more deductions than the general amount suggested by the local or federal government, then you’ll need to itemize your deductions. This can be a lot of work in that you have to have receipts and backup documentation for everything you add to the list. So, if your job requires you to drive and you want to deduct the cost of gas, you’ll need to have receipts and list the deductions accurately to avoid getting audited or penalized. A tax preparer can help you get your ducks in a row and ensure that you’ve accounted for every expense you wish to deduct from your annual income.
Other Reasons it Pays
There are a ton of reasons it may benefit you to visit a local tax preparer instead of trying to do your taxes at home. Other reasons include:
- Higher tax returns – most individuals aren’t well-versed in tax laws and, therefore, miss out on opportunities to get more back on their taxes. Tax preparers know how to look for savings to get you the most money back.
- Decreased chance of audit – the IRS and state review your tax returns thoroughly. If there are discrepancies, it could result in an audit which could lead to everything from penalties and wage garnishments to property liens and jail time. Tax preparer have to take classes regularly to keep up with the latest rules and regulations which means there are fewer chances of your getting audited if they help you file.
It might seem tempting and even logical to sign up for a free or affordable online tax filing account and complete your taxes on your own. Though those are great platforms, the truth is, they are only ideal for those who are well-versed in tax law and regulations or those who have very straightforward income taxes to file. In the event you’re going through any of the above circumstances, it’s always best to hire a pro.