Many taxpayers overlook the importance of a CPA. Automated tax programs may make filing taxes easier, but they don’t cater to the needs of the individual user, which can mean missed deductions. Also, they can’t provide advanced tax planning, an important factor for many taxpayers.
A CPA can help you navigate the tax code, provide advanced planning, prevent audits and save you money.
Here are five top reasons to hire a CPA to file your taxes:
The Tax Code Is Even More Confusing
The U.S. tax code has never been exactly straight forward. Rules change frequently and small details lurk on every line of the tax return, practically begging unwary taxpayers to make a mistake. Being unaware of all the tax breaks you are entitled to means overpaying the IRS. With most Americans struggling to get ahead, paying too much in taxes is often the difference between keeping some extra cash in the bank and living paycheck to paycheck.
Reducing tax liability is an important part of building financial security, but you don’t want to overdo it on those deductions. Most tax breaks are conditioned on meeting specific criteria and misunderstanding the qualifications can lead you to take a deduction in error. When this happens, your return is red flagged for extra scrutiny.
If you’re lucky, the erroneous deduction will be small, and the IRS will send you a letter asking the amount of the deduction and a penalty. On the other hand, the IRS may decide to audit your return and look for any possible scenarios where it can be re figured to the benefit of the IRS.
This often results in multiple deduction dis-allowances and a re figuring of your adjusted gross income (AGI). A new AGI can disqualify you from other tax benefits, causing a massive recalculation of your tax liability. For these reasons, audits can result in a tax bill for thousands of dollars, plus penalties and interest.
Unless you enjoy sifting through the tax code, it might be better to hire a professional. You’ll benefit from their knowledge and experience while saving yourself lots of time and a possibly expensive audit.
A CPA Provides Representation Before the IRS
Hiring a CPA drastically reduces the odds you will be hit with an audit; however, should you be unlucky enough to be selected for increased scrutiny, IRS agents try hard to find a reason to make the effort worthwhile. This often means aggressively searching for opportunities to increase your tax bill and charge late penalties.
When you work with a CPA, you have no need to fear the IRS. Your CPA knows the rules and has the needed documentation to back up your position. Rather than sweating, you can just let your CPA handle any IRS issues.
You Will Save Money
Even if you understand how to do your own taxes, it’s hard to match the expertise of someone who does tax returns for a living. A whole host of tax credits and tax returns are available. The qualifications are also changing all the time. When you work with a CPA, you have the knowledge of someone who knows exactly what you qualify for.
Your CPA can advise you of ideas that help reduce tax liability. Preparing a return effectively requires more than computation. It takes advanced tax planning. Your CPA can help you set out a plan at the start of each tax year, so you fully capitalize on tax savings opportunities that require specific money management moves. In addition, if you have questions about how your financial management choices will affect your taxes, your CPA is just a phone call away.
You Are Self-Employed
Self-employed taxpayers are eligible for many deductions, and considering the 15.5% self-employment tax, it’s vital to take every available one. A CPA can help you reduce taxable income, which can result in a lower AGI and additional tax deductions.
Do you qualify for the 20% Section 199A deduction? If you are not sure, consulting a CPA is a great idea.
Review of Previous Returns
Have a nagging feeling you might not have taken every available tax break in the past few years? Do you think you missed something important? In addition to doing this year’s taxes, your CPA can review previous returns. If you are eligible for additional deductions, he or she can file an amended return and you’ll get some unexpected extra cash.
Most of us hate filing taxes. The process is tedious, confusing and stressful. A CPA can make tax season a breeze. In addition to saving time and aggravation, you’ll learn new ways to save on taxes and take the money straight to the bank.
If you are looking for an experienced CPA and Tax Accountant in Michigan, Tax Avenger is the expert you need. Serving the Canton community and beyond our CPA Firm is dedicated and committed to providing exceptional service to our clients. Our firm prides itself on the extensive international and local experience in accounting and taxation while offering a full complement of services from business, Individual, financial and tax consulting to accounting, and so much more. Call today for a Free Consultation!