If you’re responsible for dealing with your own taxes, it can be beneficial to hire an accountant to make sure that you’re deducting everything that you’re entitled to. In most cases, whether you need to use a tax professional depends on your situation. If you are a regular employee who fills in W-2 forms and doesn’t make many deductions, it won’t usually be necessary to use the services of a tax professional. However, if your tax situation is more complex, it makes much more sense to enlist a professional who knows what he or she is doing.
As accountants are used to filling in tax returns and are well aware of current tax rules, they can offer advice for reducing your tax bill (legally, of course!) through deductions. The average individual is often oblivious to the type of deductions that are possible. This can be very relevant if you are self-employed or operate a small business as either your main job or a sideline.
Filling in your tax return can be a time-consuming activity even if you know exactly what you’re doing. If you’re at all unsure about things, preparing your tax return can quickly become a minefield. For those of you who are completing ‘complex’ tax returns (for example, if you’re self-employed, own a small business or have investments or dividends), it can easily take up anything from five to forty hours of your time. Most of us don’t have the time or patience to dedicate to this. If finances allow, hiring a tax professional can remove all of the stress that usually comes with preparing a tax return.
Unless you’re very familiar with tax laws, it’s likely that you will make some errors when completing your tax return. In some cases, these mistakes can turn out to be costly. As tax professionals are well versed in all things tax, they can avoid these situations.
Tax problems can crop up at any point in the year, and it’s useful to be able to seek the advice of a tax professional to deal with them. By hiring a tax professional to handle your tax return, you’ve already established a working relationship that you can use to your advantage if problems do occur.
Being audited is an unpleasant business, and it helps to have a tax professional in your corner to call upon if the situation ever arises.
On the other hand, hiring a tax professional can cost more than you’re willing or able to spend. An alternative solution is to use free tax software such as TaxCut and TurboTax to help you fill in your tax return by yourself. This can be useful if your tax return is relatively simple to complete (for example, if you’re an employee who doesn’t make many deductions beyond the standard ones), but they may be more problematic for individuals with more complex tax situations as their guidelines may not be fully up-to-date.
For example, TurboTax searches for deductions that can save you money, but a tax professional would be able to advise on whether these deductions are the most relevant to your situation. If you’re willing to part with more money, you can purchase ‘upgraded’ versions of TurboTax (such as Premier or Business packages), which are designed for tax situations that go beyond ‘simple’ tax return completion.
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