Doing Your Own Taxes

Doing your own taxes may be quite difficult. Seeing those thousands of tax codes may make you very confused.  But you don’t have to worry; there is some tax software that is now available for your use so you can conveniently do your taxes yourself.

If you do your taxes yourself, you would be able to save a lot of money since you don’t have to hire a tax preparer.  The service of tax prepares mostly cost around $100 and up even in the simplest tax returns. There is also a possibility of mistakes or miscalculations that may cost you missed tax deductions, penalties and interests.  You may rather use the free online software that the IRS website offers. Its design is perfect for simple tax returns. You may also use any of the filing programs offered by the partners of IRS and members of the Free File Alliance.  But for more complicated tax returns, there is FFA partners propriety online software that may help with those too.

doing taxesDoing your taxes yourself may have some disadvantages too, especially when you are not knowledgeable on how it must be done. There is a larger possibility of you making a mistake than a professional tax preparer, and they could usually be your representative if ever you have been questioned about your tax returns or worse, subjected to cases of tax audit.

Hiring a tax preparer is not an assurance though.  You cannot be exempted from getting audited even when a professional did your taxes for you. If you want to hire someone to do your taxes, you must consider hiring a certified public accountant (CPA). CPAs are professionals that possess the knowledge, capability and experience to accurately prepare your taxes. In case of penalties or tax audits, they could represent you and defend your tax return. Tax preparers that are not CPAs do not possess the right to defend you in these situations.

Now, when do you need to hire a professional to do your taxes? It would be best to hire tax preparers when you have some investments, real estate transactions, a business with employees and special situations or entitlements. You have to be certain that you choose a CPA tax preparer that specializes in doing tax return that is suited to the condition that you are in. CPAS are not the same, they have different expertise. Make sure to interview them before hiring. Know about their experiences and if they are capable of doing your taxes. This is a step not to be missed, especially when large amounts of money are involved where even small mistakes may result to a loss of thousands of dollars.  It can also be confusing dealing with state income tax rates.

To sum it all up, preparing your taxes yourself is not very difficult. There is free online software available in the IRS and FFS websites that could help you lessen the burden of doing your taxes.  For more complex tax situations like the ones specified above, it is advisable to hire a Certified Public Accountant. This would reduce the risk of going through errors and being subjected to fines, penalties or tax audit. It doesn’t mean that if a CPA did your taxes means you’re safe from tax audits, but they are allowed to defend you when this situation occurs. Remember to evaluate the cost of hiring a CPA alongside your estimated tax liability.

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