Like clockwork, tax season rolls around at the beginning of every year.
Filing tax returns is an inconvenience or a bother for most people, but you don’t have a choice, really. Paying taxes is not only a patriotic act, but also a legal requirement.
Failure to comply will attract a Failure to File Penalty. How does getting fined 5 percent of your tax liability for every month your return goes unfiled sound?
When you’re ready to file, you have two options: doing your own taxes or hiring an expert. Which way should you go? As you’ll learn in this article, the choice is yours to make.
Read on for the information you need to make a sound decision.
The Upsides and Pitfalls of Doing Your Own Taxes
A tax return is documentation that shows your earnings, expenditures, and other relevant financial information for the financial year that just ended. You’ll also schedule payments for your tax liabilities or request a refund if you’re eligible. It’s an annual filing in most cases.
How hard can reporting your financial matters get?
For the average person with a regular job, your paystubs provide most of the information you need to include in your tax returns. As such, with a little bit of time and some attention to detail, you can do your own taxes and move on with your life.
Plus, you’ll get a closer look into your personal finances. If you don’t work with a budget, you may get to know just how much you’ve earned or spent in the past year. Don’t be surprised to find you’re spending way too much than you should!
On the downside, though, filing taxes requires hawk-eye accuracy. A simple clerical mistake, such as forgetting to declare a certain one-time income you earned, can result in underreported income. Though not deliberate, you can face an IRS fine as a result.
Or, if you miscalculate your tax liabilities, you could miss out on a precious tax refund.
Another downside is filing taxes takes time. In a world where most people are busy with work, school, and domestic duties, getting even a few hours to do your taxes can be a challenge.
Hiring a Tax Professional: The Good and the Bad
Getting a professional tax expert is a smart move in many ways.
It saves you time because you only need to provide the expert with the financial information required. They’ll do everything else.
There’s little to no chance of making a mistake on your tax returns. These pros know the rules and the right tax forms to use.
If you’re a freelancer, for example, you might not know that you need to use Form 1099 or when it’s due. You can click for more if the form applies to you, but you can also ask your expert such questions.
All this convenience does, of course, come at a cost.
Why pay someone in such difficult economic times when you can do DIY taxes? Well, you don’t want to be one of those DIYers who get hit with regret after making a costly mistake on their taxes.
Doing Your Own Taxes or Hiring a Pro? Your Choice!
When you’re on the fence about doing your own taxes and hiring a CPA, it’s entirely upon you to decide which way to go. Both options have their fair share of pros and cons, but if you asked us, we’d say hire a professional. You’ll thank us later!
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