Did you know that Americans currently owe about $114 billion to the IRS? This figure is made up of taxes, penalties, and interest. Falling behind on your taxes is easy, and one major reason that this happens is because of a lack of preparation.
Many people turn to tax preparation software for assistance and find themselves confused and behind. Here, we’re going to discuss how you can prevent this from happening to you and your family. Read on to learn why choosing an accountant over tax software is critical.
The Basics of Tax Preparation Software
The IRS may take your tax money, but they do not charge you for filing taxes. This means that you can print and mail paperwork to the IRS to file. There is also a free filing portal available online for those with a single straightforward income.
This may sound like a good deal, but it has several caveats that you likely have not yet considered.
If you are not well-versed in tax law, it’s easy to make mistakes on your filing forms. Those who are uncomfortable with navigating tax terminology are likely to find themselves paying interest and fees to the IRS after misfiling their taxes. It’s extremely high risk.
You also will need to redo all of the paperwork that you completed, which is a lengthy process. Individuals and families filing can expect to spend 7 hours or more filing their taces with tax software. If you own a business, you may spend up to 20 hours.
This is in part because tax forms are convoluted. It also is because you will need to go back, find mistakes, and correct them. A single mistake can lead to you needing to redo all of your paperwork, which is again a high-risk task.
Challenges With Deductions
Both individuals and businesses may need to itemize deductions such as mortgage interest and charitable gifts.
Qualifying business costs might also be deductibles that you do not know about. Attempting to itemize and follow these deductibles makes mistakes easy and you may wind up paying more than necessary.
Tax Software vs Accountant Methods
Clearly, tax preparation software is more trouble than it’s worth. Hiring a professional accountant to file your taxes is a much better alternative.
The main benefits of hiring an account stem back to eliminating risk in your tax filing. Becuase experts have the tools and resources to accurately calculate your payments, you don’t need to worry about whether or not filing mistakes will come back to haunt you later.
This offers you an extra layer of security when it comes to your taxes. It can save a lot of money since the IRS won’t ding your incorrectly-filed taxes for late fees and partially-missed payments.
Professionals can also save you money because they know how to accurately calculate deductibles. You may be unsure of whether an asset counts as a business expense that’s eligible for a deduction. In these cases, filing them could lead to an audit; failing to declare them can lose you money.
Experts can help you to avoid this lose-lose situation.
Saving Time and Stress
As we brushed on earlier, using software to prepare your taxes can take up to 20 hours. This is also a challenging task that requires a lot of careful planning, math, and critical thought. You can’t put Netflix on in the background or multitask by playing music.
Hiring an accountant takes this frustrating and time-consuming task off your hands. There will be nothing to worry about.
Resolves Complicated Tax Situations
Almost every monetary transaction you make comes with strings attached when tax time rolls around. If you have dependents, investments, or significant assets, you’ll need to take more things into consideration than you otherwise would. Taxes become significantly more complex if you own a business as well.
Professionals can help to do more complex calculations and figure out how much you need to pay. They can find you the best possible payment methods and declare deductions that save money.
Additionally, those who are self-employed often struggle with taxes because of their unusually unique situations. You might qualify for home office, travel, or vehicle deductions. Professionals can help you come up with estimated payments and more.
Is It Worth Paying for Tax Preparation?
Many people hesitate to work with tax experts because of the fees associated with doing so. You may be asking: is an accountant worth it? What will happen to my money?
While hiring an accountant might cost you a couple hundred dollars, the time that you save is well worth it. You can focus on other money-making tasks for work. You also could use that time to run errands, do household tasks, and more.
Tax professionals also will save you money in the long run. They know what to declare and how to find you additional money. They stop you from paying more taxes than necessary, so you save way more than you spend in fees.
When you work with Bogart’s top professionals, you also can get other services in addition to basic filing:
- Federal and state return calculations and filing
- Optimization of taxable income
- Portfolio management stratefies
- Roth IRA contribution management
- Comprehensive tax advice and explanations
- Integrated financial planning
- Retirement planning
When choosing between an accountant or software, the answer is a no-brainer.
Get Started With Tax Preparation Today
While using DIY tax preparation software may sound like a good idea at first brush, it’s an extremely high-risk process. That’s why it’s essential to hire an accounting professional to assist you in preparing for the next tax season.
Bogart Wealth is committed to assisting individuals from all backgrounds as well as government employees with their finances. Contact us with any remaining questions that you have about our services and get started with your taxes ASAP.