You might prefer to file your own taxes, but there are good reasons to pay someone to do your taxes. April 15 just passed, but this is something to consider for next year. Every year, as the end of tax season approaches, many late filers are gathering their receipts in preparation to file their federal and state taxes. Some question whether to file themselves or hire a professional. If you can't decide, here are seven reasons to pay someone to do your taxes
1. You Don't Have Time
It takes time to prepare a complicated tax return. And if you don't have time, this is one of the main reasons to pay someone to do your taxes. Yes, you’ll spend money out-of-pocket. However, with a professional handling your return, there is one less thing to worry about.
2. Maximize Your Tax Deductions
Unless you know a lot about income taxes, there's a chance that you'll miss deductions if you file your own return. Professional tax preparers or accountants are highly familiar with deductions available to you. They can bring commonly overlooked deductions to your attention, thus reducing your taxable income and getting you a bigger refund. Use your tax refund to pay down credit card debt, increase your savings, make home improvements or take a vacation.
3. You Own a Business
If you're self-employed or an independent contractor, consider whether you have the patience to deal with a complicated tax return. The rules for a schedule A or schedule C are tricky. Since tax preparers deal with these types of tax returns on a regular basis, they’re in the best position to handle your filing.
4. It Might Be Free to File Your Taxes
Depending on where you live, some local organizations may prepare your tax return for free. To qualify, you must meet income requirements, and can typically earn no more than a combined income of $52,000. Free tax preparation is completed by certified-IRS tax volunteers.
5. Professionals Are up-to-date on Changing Tax Laws
Even if you’ve filed your own taxes in the past, you might not be up-to-date on the latest tax rules. These rules can change from year-to-year. And if you have limited knowledge, you could miss important tax deductions or prepare an erroneous return. Unfortunately, mistakes are costly. If the IRS catches a mistake years later, you might owe additional tax plus any penalties.
6. Receive Tax Guidance Throughout the Year
If you hire a professional to do your taxes, this person can assist if you receive any correspondences from the IRS, and if you have questions about your taxes. If you file your own taxes, and then receive an audit letter from the IRS, you will need to hire an accountant or a lawyer to help with the situation.
7. Provides Peace of Mind
At the end of the day, hiring a professional to do your taxes provides peace of mind. Obviously, professionals make mistakes too. However, there is a lower chance of a major blunder when an experienced preparer handles your filing.
The decision to file your own taxes or hire a professional is entirely your own. But if you want to maximize your deductions and reduce the risk of errors, you need to have a professional on your side. How did you handle your taxes this year? Do you plan to file your own income tax return next year?