When it’s tax time, one of the first decisions facing many folks is whether to use a tax professional or to do it yourself. If you are at this juncture, here are a few considerations.
Is a Self-Driven Software Package Right for Me?
This could be the right answer for many people. If you have the computer skills, and are comfortable with the input process and maneuvering around the appropriate screens, and have a fairly straightforward tax situation, then you could save some money with an individual software package or an on-line service. A number of individual taxpayers find this process fairly easy to follow and take pride in their ability to get through it themselves.
However, there are some risks. You may encounter an income item that you can’t find a place for in the available screens. You may make an inadvertent input error. Your finger may hit a wrong process key that you can’t figure out how to undo. And the on-line assistant or telephone no-help line isn’t solving the problem. Some of these issues get especially irksome when you have more complex income items such as capital gains and losses, rental income and expenses, self-employment or partnership activities.
And there is nothing worse than, once you’ve put your best efforts into the return and sent it off to the IRS or the state, getting a notice that informs you something was wrong with your return, and now you owe additional money to the federal or state government, including perhaps interest and penalties. Even the IRS return address on the envelope gives people the wrong type of chills! Where and how did you go wrong? And how do you get these guys off your back?
Is It time to Turn to a Professional Tax Preparer?
If numbers or computers are not your strong suit, or you’ve tried the do-it-yourself approach and hit a frustrating brick wall, it may be time to engage a tax professional. Using an experienced tax preparer can offer many benefits. Professional income tax preparers understand the nuances of the tax law and filing deadlines, and therefore can help ensure that your tax returns are filed accurately and on time.
Any tax preparer with an IRS Preparer Tax Identification Number (PTIN) is authorized to prepare federal tax returns for a fee. As you search for a preparer, ask a few questions to get comfortable that the preparer has experience and is current with all the tax law changes that have occurred over the last few years. Also, ascertain whether he/she has experience with the type of return you need to submit. For instance, if you have your own business, or have one or more rental properties, or have an office in your home, make sure the preparer has experience in these areas and knows all the “tricks of the trade” to prepare your return to your best advantage.
An experienced professional should have a few years of exposure to a variety of individual income tax situations. The person should have seen yours or a similar situation many times over, and have the ability to research any angles with which he/she is not familiar.
In addition, the tax professional should provide you with some pointers to prepare you for next year’s tax situation. With a little bit of planning, you may be able to lower your tax liability by tweaking things going forward, such as investments, charitable contributions, retirement plan contributions, rental or self-employment activities. A small amount of planning could identify strategies you can employ to legitimately lessen your income tax liability.
Wouldn’t it be nice to be able to pocket a few extra dollars, and not unnecessarily hand them over to Uncle Sam?
If you would like assistance with your tax preparation or tax planning, please give us a call or check us out online. We have over 40 years of experience in the Greater Hartford area, 06110, and would love to hear from you!
