Monday, January 23, 2017

When it makes sense to use a paid tax preparer

Everyone is looking for ways to save money. From painting their own home to changing their own oil, Americans frequently try to do something themselves rather than pay someone else to provide that service. Often this does makes sense and does save money. However, sometimes a person can ultimately cost themselves more in time and money than if they had just hired a professional from the outset.
This is often the case when someone decides to undertake the task of preparing their own income tax returns. Individuals may think to themselves, “how hard can this be”? In addition, with the widespread publicity of tax preparation software that makes the preparation process look extremely easy and straight forward some taxpayers are electing to simply prepare their own returns.
There are times when this may ultimately prove beneficial, but there are circumstances where using a paid professional does make sense and can save money, time and stress. For instance, if a taxpayer has a complex tax return it generally makes sense to use a paid tax preparer. One advisor indicated that anyone who has rental property, a small business, or complex investments should consider professional help. Paying a tax professional is paying for their knowledge and experience, and not necessarily simply paying for access to their tax preparation software.
It may also make sense to use a paid preparer when there was a major event in your life last year. The tax preparation process becomes more complex when things like a marriage, divorce, or death took place in the year. You may also benefit from a paid professional if you are buying a house, having a child, or starting college. The complexity of a tax return can increase significantly through the occurrence of one or more of these significant events.
If the tax return preparation stresses you out and the idea of an audit or tax notice causes you to lose sleep then it probably makes sense to use a paid preparer. A paid preparer is there to calm your worries and to respond to any taxing inquiries that may come after the returns are submitted. A paid preparer can work with the IRS on your behalf in the event that your return is selected for audit.
If your schedule is such that finding time to prepare your own return is impossible than it makes sense to use an outside preparer to get this off of your plate and to get it done. Each year there is a learning curve to complete all of the forms and to prepare your returns. Your time may be more effectively spent in other areas and allow the paid professional to effectively and efficiently prepare the returns.
It also makes sense to use a paid preparer to assist you with long-term planning. A good tax preparer will help to identify savings opportunities for their clients and to help to minimize the tax obligation. A good tax preparer is more than simply reporting the tax information to the taxing authorities, but is preparing the return in such a way as to reduce the tax obligation. In addition, they will make suggestions to their clients concerning current and future actions that can be taken to reduce taxes and improve the individuals overall financial situation.
So, although it may appear on the surface that you will save money by preparing your own return, this is not always the case. A paid preparer can help to reduce the stress, free up your time and help to reduce your tax obligation. In addition, they will be there in the event of any audit or letters that need clarification and responding to.