Can you prepare your income taxes on your own?

Can you prepare your income taxes on your own?

 

They say 2 things in life are inevitable – death and taxes. But, is preparing taxes such a tough chore as they make it out to be? Let’s talk about tax preparation and how you can get help from a professional tax preparer to have squeaky clean taxes with the IRS, and also secure tax returns.

 

Let’s face it, taxes are not a joke in the United States, and acquiring the financial literacy to deal with them is not as simple as reading a guide online. Additionally, tax laws do tend to change often to accommodate new advancements in the economy such as automation, trading, administration etc. Some tax forms become redundant, new ones show up as well as schedules. There are, however, many tools to help you out and make the process go faster, as well as professionals who will even do it for free in some circumstances.

 

In my own case, my business and income sources were legally based in Tucson, Arizona. The VITA (Volunteer Income Tax Assistance) Tucson tax preparation program allows for free tax preparation from IRS-certified preparers, but only to households earning up to $66,000 yearly, which I was able to qualify for.

 

Many of my friends and business colleagues had higher incomes in their households, though. A good friend of mine found many volunteer tax preparation services online from aspiring accountants but was hesitant to go with them. Having been in their shoes once before he understood the necessity of volunteer labor early in the career, but his financial situation had a few points that experienced professionals should address.

He went ahead and got a Tax pro in Tucson to audit his financials. The tax preparation service was handled in the following way, for anyone wondering in Arizona:

 

  1. Thorough financial information was gathered from multiple online and offline sources to assess how to manage the case best, and my friend was kept informed with regular updates and necessary inquiries.

Many receipts, information returns and personal information had to be gathered, but once my friend prepared all of them, it was entirely off of his chest.

 

  1. It turned out my buddy was behind on paying a portion of his taxes from previous years, and even though he had been negligent back then in addressing the situation, at the given moment, the tax professional offered to help him out and reduce any penalties he may face where applicable.

 

  1. Back to the current tax year, my friend was worried that he would need to file an extension request as gathering information had taken more time than he expected, but luckily everything was filed just in time, and at the very end, my friend was able to enjoy multiple returns on his expenses that he could have otherwise not adequately filed for.

 

 

If you decide to have a tax specialist analyze your financial reports and prepare your taxes, you will save yourself the headache of doing the work yourself, but such services generally cost a good deal of money. There is a way to get a ‘free’ consult and tax help from a professional though. If you are eligible for tax returns based on your financial history of the previous calendar year, some tax return specialists will offer to manage your tax filing and returns for you, while taking a small portion of the returns as compensation for their work. The best part about this arrangement is that there are no out of pocket expenses, as long as the professional can conclude you are eligible for refunds.

 

In many jurisdictions, you can prepare your taxes online and get assistance with filing them. You can also utilize various software solutions to help you out, but most of these software options aren’t full proof. Sure, if you are a sole proprietor that offers simple goods and services without business expenses (you work from home, for example), there won’t be much paperwork.

 

Software solutions usually allow you to import most of the data from various formats, upload appropriate IRS Forms and Schedules, and get suggestions and guidelines. Many also offer phone and messaging support related to both the software and the tax filing itself, as well as context-sensitive assistance.

 

But, many of you have complicated professions with many services, thousands of products you provide, various business expenses, you pay workers on varying bases etc. It can even get much more convoluted than that, and at that point, it’s impossible to file everything properly even to your best ability. It takes time and money is at stake.

 

The benefits of commissioning a professional scale with the complexity of your finances. Besides convoluted financial business situations, travel and relocation can also complicate your taxes, as well as healthcare, itemizing your deductions and worst of all – filing taxes late.

 

How to find the right accountant?

First of all, you need to identify the type of service you need correctly. There are different professionals that specialize in completely different fields, as well as jacks of all trades that may not be proficient enough for your needs. A tax preparer that cares for your best interests will often agree to the aforementioned free service with payment only after you’ve received your tax returns. This is also a strong indicator that the professional in question conducts his practice with diligence and believes in his knowledge.

 

No matter the option you deem best, we strongly feel it’s about time to stop doing your taxes the old-fashioned way. Paper forms, pens and calculators are just unnecessary at this point, unless you’re a nostalgic type. We laid out the 2 options you have available to transition to. Either e-filing online with software help or leaving it to a professional to save time and headaches if you are overwhelmed. In case your state has similar programs to the Arizona tax preparation VITA program, you should check those out first. Later on, you can move on to asking you friends and colleagues for word of mouth recommendations of professionals they had the opportunity to work with, which will give you a good idea what to look out for and what to avoid. Finally, searching online is always an option, and with this article, I hope you’ll have an easier time getting help online.