You can start filing for your 2017 individual income tax season starting January 23. So, do you take care of it yourself or do you hire a professional?
If you’re looking to save some money, preparing your taxes yourself can be tempting. I used to take advantage of IRS.gov Free File so I could save a few bucks, but that was when my returns were simpler. It was also before I researched, and eventually hired, a professional.
While the self-service tax industry seems to be more popular than ever, after speaking to some Enrolled Agents (EA), the only federally licensed tax practitioners, I’m glad I’ve decided to hire a tax professional.
Before you prepare your own taxes this year, consider these five reasons you should hire a tax professional for yourself.
Your Tax Situation Isn’t Simple
If your tax return is simple, you could probably get away with filing your taxes yourself, according to Crystal Stranger, EA and president of 1st Tax. “Generally speaking, if your only income is wages that come on a W-2, you do not have children and you don’t have work-related business expenses you claim, then self-preparing is probably the best way to go.”
So if you own a business, have children, have 1099 income or any other more complex tax situations, you’d probably be better off, and receive a better return, to hire a tax professional.
You Don’t Want to Risk Wasting Time or Money
Whether your return is simple or complex, if you handle the filing of your own taxes, there’s a chance you could make a mistake. And if there’s one place you don’t want to make a mistake, it’s on your taxes.
“I fix many mistakes from DIY folks. They come running in with tax notices, howling that they now owe thousands of dollars for their errors,” Abby Eisenkraft, an EA at Choice Tax Solutions Inc., explains. “And when I ask about certain items, they tell me that they didn’t understand the interview questions.”
My tax person charges only $65, which is a price I’ll gladly pay to avoid some IRS-induced stress. And just like making an illegal left-hand turn, ignorance of tax law is no excuse.
Tax Law Is, Well, Law
There’s a reason my tax person can charge $65 for less than an hour of work – tax law can be hard to understand. Plus, there are changes every year, which can make things more difficult for people trying to file their own taxes.
“EAs must maintain their competency in tax matters by taking at least 24 hours of continued education each year,” says Ira Smilovitz, an EA at Glenwood Tax Services.
He continues, “If you don’t know what you’re doing, you will produce a pretty return that’s useless.”
You Want the Best Possible Return
Do you want the best possible tax return refund? I’ll wait for your eye roll to complete … of course you do! You probably already have 10 ideas of what you can spend your refund on.
Thomas J. Williams, an EA who operates Your Small Biz Accountant, explains, “Your tax return is the foundation for a number of tax credits, as well as the source document for a variety of third-party opportunities, such as student financial aid and loans.” He advises that you work closely with a licensed accountant so you’ll have a more strategic return that’ll lead to a more favorable return.
You Want Personalized Advice to Plan Ahead
Even if you have a simple return, it may be worthwhile to hire a professional, especially if you think you’ll be in a different situation in the coming year.
If you’re switching jobs, buying a new house, planning to invest funds or anything else that will change your return for next year, a professional can help you plan ahead.
“They miss the opportunity for great advice,” Eisenkraft says. “Even a taxpayer who doesn’t currently have a complex return may not understand the benefits of a 401(k). I can show them the difference in what the tax return could look like, as well as point out benefits for the following tax year.”
While preparing your own taxes may be more convenient and cheaper, especially in the short term, it only takes one error to make it not worthwhile.
Speaking of worthwhile, here are some worthwhile ways to spend your refund .
The post 5 Reasons To Hire a Tax Pro To Prepare Your Income Taxes appeared first on ZING Blog by Quicken Loans .