Should I File My Own Taxes or Hire a Professional?
Tax season is almost upon us, and your instinct may tell you to try and save money by filing your own taxes instead of hiring an accountant. You may have even done it successfully in the past.
Know This Before You Make A Costly Decision
However, taxes are more complicated than ever right now due to recent changes in the tax code and policies adopted in response to COVID-19. By hiring ProActive Tax Solutions, the tax accounting choice in the North Bay Area, you can find greater peace of mind and know that a team of experts is working to save you time and money.
If you’re still unsure whether hiring a tax professional is the right choice for you, consider the following six questions.
Did I Earn Income from Multiple Sources This Year?
In our current gig economy, more people than ever are working on side hustles or have multiple streams of income.
In 2020, a record number of Americans also received unemployment benefits.
Any time you receive payment from multiple clients or businesses, it complicates the tax process, as you have to track down 1099 forms from every person or business who paid you more than $600 in that year.
There are also certain deductions and tax regulations that vary depending on whether your income comes from a W-2 or a 1099, so it’s best to consult with a tax professional anytime you have multiple sources of income.
Are There Other Factors That Will Complicate My Tax Return?
Multiple streams of income aren’t the only things that can make your tax filing process more complex. If you own property, have investments, or can claim dependents, those things will all change your tax return.
Additionally, if any of the following situations apply to you, you’ll definitely want to work with a tax professional:
- You own your own business or are self-employed: If you’re a business owner or self-employed individual, your taxes will automatically be much more complicated. There are also little known write-offs that could save you money if you work with a tax professional.
Plus, online filing services charge much higher rates for self-employed individuals and business owners, so it’s probably more cost effective to hire a tax accountant anyway.
We’re proud of our transparency around pricing, and you can see how much your tax preparation is going to cost right here on our website.
- Your Family Status Has Changed: If you’ve gotten married, had kids, experienced the death of a family member, or gotten divorced, your tax situation has most likely changed. Even if you’ve filed your taxes on your own before, it’s best to consult with an experienced tax professional who can help you navigate these new circumstances.
- You Employ Someone Else: If you employ someone like a housekeeper or a nanny, you should work with a tax professional to ensure you’re paying them ethically and legally.
- You Have Questions or Don’t Feel Confident: When it comes to taxes, it’s always better to ask a professional than to try to guess at the correct answer. If you’re unsure of any part of your taxes, or you just worry that you’ll do the math wrong, then it’s probably not worth the risk. The cost of hiring us to do your taxes is relatively small compared to the expenses you could incur from one small mistake — whether it leads to an audit, legal troubles or just majorly overpaying.
Can I Receive A Larger Refund with Deductions?
In many cases, working with a tax professional can actually save you money. Even though you have to pay your accountant, they often end up paying for themselves by helping you receive a larger refund.
At ProActive Tax Solutions, we charge $350 for an individual Form 1040, with additional fees for other forms and schedules. But just by paying that cost, you gain access to a professional who is up-to-date on the most current tax regulations and laws and is dedicated to helping to minimize your tax burden.
We can potentially save you money by finding deductions you don’t know about or just by helping you avoid overpaying.
For example, did you know that there are deductions available for people paying student loans? Those deductions can be confusing though, and it’s easy to claim them incorrectly in a way that catches the Internal Revenue Service’s attention and makes them more likely to perform an audit. By working with a tax professional, you can get the largest refund possible in a way that’s ethical and legal.
Working with a tax professional can also help you gain a better understanding of which route you should take with your deductions. Itemized deductions are less appealing for most people now that recent tax laws have increased the standard deduction. But some people, such as those with major medical costs or a mortgage, might still benefit from itemizing your deductions. If you plan to do so, you should always work with a tax professional, as the process can be complicated.
Am I Up-To-Date On All of the Latest Tax Code Changes?
The American tax code is thousands of pages long, so even if you think you have a “good enough” understanding of taxes, you’re probably missing something vital. The tax code is also constantly changing, so it can be difficult and time-consuming to stay up-to-date on the latest policies.
You may have heard about some of the major changes that went into effect in 2018 through the Tax Cuts and Job Act, but did you know that certain policies changed in response to COVID-19? For example, under the CARES Act, all taxpayers who donated money to charity in 2020 can claim a charitable deduction of up to $300 in addition to their standard deduction.
Rather than spending hours trying to read up on all the latest tax changes and make sure that you don’t make a costly mistake, you can save yourself a significant amount of time and stress by hiring an expert who’s constantly working to understand the tax code and apply it to your unique situation.
What Will I Do If I’m Audited By the IRS?
There are certain red flags on a tax return that frequently trigger an audit from the IRS. We work hard to stay up to date on what those triggers are, so we can help you avoid them.
And even if you do file your taxes correctly, there’s still a chance that you could be audited. In fact, the more money you make, the more likely you are to be selected for an audit.
If that happens, you’ll want to have an Enrolled Agent in your corner, because they can represent you before the IRS.
The whole process will go much more smoothly — and likely cost you less money — if that tax professional is already familiar with your finances and worked with you on your taxes, so it’s better to be proactive and hire them before you even start filing.
By working with us, you can have peace of mind from knowing that you’ve hired an enrolled agent, which is the highest level of credentials for tax preparation. Our owner Georgia Rogers, E.A. is licensed by the IRS and is qualified to represent you in front of both Federal and California State tax agencies.
How Much Time Will it Take to File My Own Taxes?
You may not always realize it, but your time is valuable. Why spend hours filing your taxes when you could be making more money, spending time with family, or just enjoying life?
And outside of the actual time you spend sitting down to work on your taxes, how much time do you spend stressing about them? Hiring a tax professional can help alleviate that stress, allowing you to focus on the things that matter.
If you’re ready to hire a North Bayt tax accountant who’s qualified to handle your personal taxes, consider ProActive Tax Solutions.
When you work with us, your tax return will be personally overseen by Georgia Rogers, E.A., an IRS Enrolled Agent with 25 years of tax preparation experience.
Our Corte Madera tax preparation office is right off of the 101 and there’s plenty of free parking. All you have to do is call (415) 924-6240 right now to schedule your free consultation with Georgia. What are you waiting for?