Are you paying too much in taxes? Are you sure you have claimed every possible deduction? It is possible to do your taxes yourself — especially if you have a very simple tax situation — and there are tools available out there to help you. However, in this era of increasing specialization, there are some very good reasons to hand this responsibility off to a professional:
It will save you time
Our lives are busy. Work, family, and various other activities bring a constant demand on our time. Keeping up on tax laws — let alone the actual time preparing and filing taxes — can be an unnecessary burden.
It will improve your tax planning
Your Pinnacle Wealth Manager can help you with many facets of tax planning, but they can also coordinate with your accountant. That combination of general expertise and specific knowledge of your situation can increase the ultimate effectiveness of your plan.
Tax law is in constant flux, with tax loss (or even tax gain) harvesting, Roth conversions, and many other tax strategies impacted by recent changes. Accountants keep up-to-date on any modifications and have the most current information to help you manage the impact of new laws.
It could save you money
While hiring a professional accountant is not cheap, it can often save you money in the long-run. Reviewing your financial history each year allows your accountant to target every possible deduction and credit. Unless you’re on top of things, it’s easy to unwittingly increase your tax burden by failing to make every legitimate claim you can.
For example, while most people know that mortgage interest is deductible (at least for now), lesser known items such as moving expenses, travel expenses, or home office deductions can be quite complicated. Each state also has it own unique rules that need to be accounted for, such as deductions on certain types of retirement income. Not only is knowledge of all of this critical for the immediate tax-year, but accountants can go back and review prior tax-year filings to uncover mistakes you may have made in the past.
You could potentially save thousands of dollars, just from finding all of your tax-deductions. With the fee for an accountant starting at a few hundred dollars (dependent on experience, qualifications, and the complexity of your returns) an accountant could be a worthwhile investment.
It will give you peace of mind
If you make a mistake in your tax return, you could be liable for tax penalties and interest. An accountant will ensure that you’re fulfilling your obligations in their entirety, and in a timely manner.
In addition, were you ever to be audited by the IRS (knock on wood), you would have the peace of mind of knowing that you have a professional supporting you – the same one who prepared your taxes to begin with, and who therefore has intimate knowledge of the details.
It’s good for business
If you are self-employed or a business owner, then your complexities increase significantly when it comes to taxes and the financial elements of a business. A good accountant will be familiar with your financial statements and the available software you can use to track them. Proper accounting here can lead to a better understanding of your business, and better business planning going forward.
Copyright: gresei / 123RF Stock Photo