Thursday, February 6, 2014

Do you really need Professional Tax Preparation?

If you’re like many Americans this month, you’re thinking about how you’re going to do your taxes. Unfortunately, there’s seldom any particularly easy way to go about it, whether you go in for self prepared taxes, use tax preparation software, or have a family member do your federal income tax prep for you. You still have to collate all your forms, put all your ducks into a row, and dig out all those receipts that may or may not still exist somewhere to cover you for those charitable contributions for your 2013 taxes! It can be so overwhelming, particularly if you’re still relatively new to the income tax game, that you may be thinking of having professional tax preparation done, even if you don’t really need it. So, how can you tell whether you’d be better off to get your taxes done by someone else? Fortunately, there’s an easy answer, and it’s free, too!

If you don’t own a home, don’t have children, and don’t own a business, you’ve got what might be considered the “easiest” taxes to do. Your 2013 taxes can be self-prepared with the IRS’ simple-to-use 1040EZ form. It has instructions that are (relatively) easy to follow, and doesn’t deal with complicated deductions such as more complicated filers will have to deal with. Think of it this way: If you’re on your first job, don’t have kids, and can’t really deduct anything, the 1040EZ form is right for you. Additionally, you won’t typically need professional tax preparation to get it done! Of course, the tide is turning in a wholly unexpected way when it comes to this particular federal income tax situation. Read on to find out how.

In order to draw in customers that will stick around year in and year out, when their tax preparation will take on new and expensive dimensions that make it almost impossible for a novice to do taxes without at least the help of tax preparation software, some pros are offering free 1040EZ filing. How can they do this, you might ask? The answer is simple. For a seasoned tax professional, the EZ form is a no-brainer. It’ll typically take them about 10 minutes to knock it out and send it off, so they’ll take that 10 minute hit in order to earn your business for next year - and the next year, and the next. It’s all about repeat business and customer loyalty! So, the question here becomes, do you want to get your taxes done, or do you want to learn how to do it yourself?

Later in life, you’ll find the allure of professional tax preparation much more interesting. You might find yourself in a position to be able to itemize your deductions, or you may find yourself in a tight federal income tax “spot” that seems to have no real way out. If you own a small business, a large business, or have children who have incurred medical expenses. If YOU have incurred medical expenses that exceed the IRS’ published dollar limit, then professional tax preparation might just be worth the few dollars you’ll invest in it. 

One of the benefits of professional tax advice is the preparer’s ability to look back at your past taxes and see where you might have run afoul of the IRS without realizing it. You may have money coming to you you weren’t aware of, in fact! When you’re thinking about having your taxes done professionally, take all this into account. For the relatively low cost of having them done, you may find yourself recovering hundreds, or even thousands of dollars, or even minimizing the damage done if you you wind up owing taxes. We won’t go into such ugly things right now, though, what do you say? Let’s leave that for another time.

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