Neglecting your personal finances can lead to all types of problems in the future. Therefore, you should stay organized and make sure to keep close track of your finances. Part of keeping your financial life in order includes dealing with filing your income taxes. Failure to do so can result in fines and various other charges. The Internal Revenue Service (IRS) may even decide to contact you by mail, which is usually not good news.
Therefore, you should make sure to plan ahead and prepare to file your taxes on time or even early if possible. However, whether you decide to file your taxes yourself or hire a competent tax professional, such as Western Shamrock Corporation (Local) tax preparation service(s), will depend upon your knowledge of tax laws and accounting and also how much time and energy you are willing to spend. You should carefully examine the pros and cons of filing your own taxes since there are some significant risks and disadvantages in choosing to do so.
Time factor
Time is money, as they say. This is one thing to think about before choosing to file our own taxes. In many instances, depending upon your situation, filing your own taxes can be an extremely time-consuming venture. Taxpayers spent an average of 13 hours, according to the IRS. If you have to file a Form 1040 then that amount of time goes up to 16 hours. However, if you have to file business taxes, the amount you will spend jumps up to 24 hours on average. In more complex cases, the amount of time spent can even be more. Depending upon your situation and how much you value your time it may make sense to hire a tax professional.
You can deduct tax preparation fees
One of the drawbacks of hiring a professional tax preparation service is the fees charged. However, if you itemize your taxes you may be able to deduct the fees charged for a professional tax preparer. If you file Form 1040, you can deduct tax preparation fees under miscellaneous deductions as long as your deductions under this category is 2 percent or less of your adjusted gross income.
Constantly changing tax laws
Another reason to consider hiring a professional tax preparer is the constantly-changing federal tax code. Each year the tax laws are adjusted making it almost impossible for the everyday person to be completely aware of the changes and if they may be applicable to his or her situation. A good tax preparation service should be up-to-date on all of the latest tax laws in order to make sure you are in full compliance with regulations while ensuring you are aware of all of your options. This will allow you to minimize your tax liability and possibly even help you receive a large tax refund.
Save money
Of course, the obvious reason to do your own taxes is to save money on the preparation fees. This may make sense if your taxes are fairly simple and straightforward. If you have a basic understanding of tax law you may be able to get by. With the amount of free information on the Internet, it is definitely possible to teach yourself. However, you will have to be careful to only use accurate sources of information. On the other hand, there are certain circumstances which are too complicated for most untrained people to handle, requiring the help of a competent tax preparation service.
If you own, sold or started a business it may not be a good idea to do your own taxes. Also having various investment gains or losses can make filing more challenging. Capital asset, real estate, and trust fund transactions will require significantly increased time and effort to report. If you receive income in a state or country that is not the same as your residence, certain tax laws may apply in different ways which could require significant tax law knowledge. Additionally, if you are self-employed your tax filings will be significantly more burdensome than the average nine-to-five worker.