Not only will a preparer help you calculate your self-employment taxes, but they'll also make sure you take advantage of the many deductions and cancellations available to you. So, unless you're particularly tax savvy, virtually every small business owner or self-employed person should consider hiring a tax professional. A general rule of thumb is that the more tax events you have, the more likely you are that hiring a tax advisor can help you save money. Every time you earn or lose money, the IRS refers to this as a “tax event.” Basically, this is an event that changes the amount you'll owe on your year-end taxes.
If you rent your apartment on Airbnb, you have caused a tax event by earning money. If you sell stocks at a loss, you have caused a tax event by losing money. In addition, the professional may discover deductions, credits, or other tax strategies that you are not aware of and that could significantly reduce your tax bill. Conversely, the more forms require your taxes, the more likely you are to benefit from hiring a tax advisor.
If you don't have a lot of time to spend on tax preparation or your situation is complicated, hiring a tax professional is often the best option. In many cases, tax advisory services are available online, although you can also access their services through an office. If you're trying to hire a tax preparer in the middle of a busy tax season, it can be difficult to find someone willing to take time out of their day to sit down with you for an extended interview. Once Junior goes to college, he may be able to use the lifelong learning tax credit or the education and fees deduction to reduce his tax liability.
If you have experience with business-related tax forms or want to save money on an accountant, you're sure to find tax software that fits your specific needs. An experienced tax preparer can detect deductions you're not aware of, avoid costly mistakes, and help you create a long-term tax plan. The initial savings of using tax software instead of an accountant is one of the most attractive benefits of filing your own taxes. As a result, they have the kind of experience that seasonal tax preparers often lack, although CPAs sometimes rely on tax software to make their jobs easier.
For example, a tax accountant can advise you on ways to save for your children's education without paying taxes or on how to reduce taxes on your capital gains. If you've decided that your tax return is too complicated to manage on your own, or if you don't have time to deal with all the rules and forms, here's how you can find a tax professional to help you reduce the burden. Some states, including Florida, Nevada, Tennessee and Texas, do not impose any state income taxes and therefore do not require an annual tax return. But what exactly makes a tax return complex? Here are some scenarios that could make it a little difficult to prepare your tax return.
Even if your tax situation is simple, hiring a professional will save you the time and stress of doing your taxes.