Should I Do My Own Taxes? When to Go DIY and When to Hire an Accounting Firm or Paid Preparer

February 17, 2012 by  Filed under: Taxes 

Hiring someone to file your taxes can be expensive, but it can also save you time and frustration. If you’re a financial whiz, or if your return is straightforward, you may not need tax preparation services; however, more complicated returns can benefit from the help of a professional.

If you aren’t married, held only one full-time job last year, have few investments and little debt, and don’t own property, you might find tax season to be a breeze. Your tax return should be fairly straightforward, and you can probably file it yourself using tax return filing software. However, many people aren’t so lucky. The more complications to your tax return, the more frustrating it can be to figure it out and to file correctly. That’s where a professional tax attorney, accountant, or paid preparer comes in. These experts understand the nuances of tax law and can help you maximize your refund-or at least minimize your taxes owed.

Multiple Jobs

If you earned your living from multiple jobs-particularly if some of those jobs were part-time, freelance, or contract positions and did not have taxes withheld-you may benefit from hiring a tax preparation specialist. You have multiple W-2s and 1099s to juggle, and if you’re filing itemized business deductions, you’ll have to separate those out by job. It gets even more challenging if you worked in more than one city or state, or if you worked in a separate city or state from your residence, as you’ll have to separate out city and state taxes. An accountant in your area will be able to help you sort through the necessary documents and arrive at the correct tax deductions, payments, or refunds.

Other Sources of Income

Did you earn a large amount of interest on bank accounts last year? Do you have investments? Are you the owner of a rental property from which you earn income? The IRS takes all of your income into account when determining your tax liability. A paid preparer or member of a CPA firm will ask you targeted questions to ensure that you are reporting everything you earned and claiming all of the relevant deductions as well.

Self-Employed or Business Owner

If you own your own business, your business expenses are completely intertwined with your personal income and finances. As a business owner, you’re eligible to deduct a percentage of any business losses-but if you deduct too much, or lose money consistently for several years running, your tax return might come under scrutiny from the IRS. If you’re at all uncertain as to your tax liability and what deductions you’re eligible for as a self-employed individual, hire a professional tax preparer to help you during tax season. An accountant can also help you prepare tax documents for your employees.

Many people feel comfortable completing a basic tax return on their own, especially if their circumstances haven’t changed over a number of years. However, if your financial situation is complicated or you expect it to become more complicated in the future, you may want to start building a relationship with a tax pro now. You’ll have someone to meet with who understands your unique financial circumstances. And, in the unfortunate case of a tax audit or issue with back taxes, your accountant, tax attorney, or paid preparer will be your advocate and your guide.

Penny Jones, a senior Internet marketing strategist for the local online advertising firm Prospect Genius, files her own taxes each year.

Article Source:
http://EzineArticles.com/?expert=Penny_Q_Jones

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