It’s tax season, and millions of Americans are sitting down with calculators and tax software (or paper forms) to prepare their own taxes. Many of them may believe that doing it this way is saving them money. In reality, doing your own taxes may be costing you money.
The National Society of Accountants has a lot to say on the issue, including many reasons why tax professionals can get you bigger refunds, help you owe fewer taxes, save you headaches, and reduce the possibility of an audit.
Reducing the chances of an audit. Audits are expensive and distressing, and if you’re doing your taxes wrong, you could wind up owing fines and fees…and who needs the stress of an audit? A tax professional can help eliminate errors and ensure your returns are prepared correctly.
Help with money planning. You will benefit from money-saving tax planning by using a professional tax accountant. Tax professionals can advise you now and all year round on the best strategies to make smart tax-saving decisions, so you owe less when mid-April rolls around each year.
Time savings. If you’re like most Americans, it takes hours (in some cases, days) to properly prepare a tax return. In fact, the Internal Revenue Service (IRS) has estimated that it takes nearly 20 hours to complete the average tax return with deductions. Think of how much 20 hours of your time is worth.
Understanding of complex tax codes. Tax rules and codes change each year, and keeping up with those changes can be burdensome. (Chances are, you’re not settling into bed each evening with a copy of Tax Advisor magazine. Professional tax preparers, of course, do keep up with all those changes each and every year so you don’t have to.
Reviews of past tax returns. The good news is that if you’ve made errors in the IRS or state’s favor in the past, those mistakes can be rectified in this year’s tax return. A professional can examine your past returns for accuracy and help you recoup any money you lost due to mistakes. You may be owed a lot more than you think!
Having a pro on speed dial. Once you’ve established a working relationship with a tax professional, you’ll be able to pose any questions to that person throughout the rest of the year when it comes to the tax implications of big events such as starting a business, investing in green energy improvements for your home, an inheritance, buying a home, college savings and more.
Before You Engage a Tax Professional
You’ll still have some homework to complete before you see a tax accountant. You’ll need to gather and organize your records, including W-2 forms, 1099 forms, mortgage and bank statements, charitable contributions, and household expenses (if you’re self-employed). Properly organized paperwork saves your tax preparer time and helps keep the fees down.
DOAAR is a small business tax, bookkeeping, and consulting services firm, with an additional focus on its client’s personal finances. Specializing in bookkeeping, controller, and CFO services, DOAAR’s offering spans daily accounting, month-end close, complex financial modeling, and oversight. From execution to analysis and strategy, DOAAR provides clients with a powerful and fully integrated back-office accounting solution. We have locations throughout California and the rest of the U.S. Visit our website for more information or to contact us.