The dreaded and most excruciating tax filing season has begun. It’s time to crunch the numbers, put them down and file your income tax returns by April 15, 2016.
Earlier, I used to do my taxes due to the following reasons:
- I wanted to keep my financial details private
- I liked the feeling that I could calculate all the numbers
But, I don’t file my income returns on my own now. Huge workload and family commitments don’t leave much time to do my taxes. Plus, the tax laws change every year. It is really not possible for me to remember all the minute details 24*7.
Time changes everything. And, my thoughts and perceptions have changed a lot in the last few years. I firmly believe that there is no harm in approaching a tax accountant. But, I do understand that not everyone shares the similar sentiment. Some people trust tax accountants whereas others don’t. Some people don’t have any clue about where to start.
When should you approach a tax accountant?
The decision to hire a tax accountant is a personal one. Here are the few circumstances that can influence that decision.
1. You are self-employed: Do you own a business? Do you make lots of financial transactions every day? Each financial transaction would have a tax consequence. The higher the number of financial transactions you make, the greater the number of things you have to consider. A tax accountant can help you handle complex situations such as business meals and travel, vehicles, deductions for a home office.
2. You have no idea about tax codes: Over the last decade, Congress has made as many as 5000 changes to the tax code. If you don’t have the time or patience to study and understand 4 million words (that’s the length of the tax code), then it is better to hire a tax accountant.
. But, you’ll face a tough time in understanding all the deductions and credits.
3. Your yearly income is more than $200K: The higher your income, the greater is your tax liability. The chances of getting audited are higher than others. If you’re one of those persons who get nervous just by hearing the word ‘audit’, then I would suggest to approach a tax accountant.
4. Your life changed in the last year: Did you have a baby last year? Did you take wedding vows in 2015? Did you buy your first house? These are major events in your life and would affect your tax filing. It would be good if you go to a tax accountant to document everything for the first time.
5. You’re not good at numbers: Does the very idea of crunching numbers and calculating deductions makes you nervous. If so, then it might be wise to consult a tax professional.
6. You wish to itemize deductions: This creates a complex tax situation. You can itemize your deductions when you have a mortgage or huge medical expenses or made donations to charitable organizations. This would help you save money. Since the process is a little complex, so it’s better to consult a tax professional.
7. You have a casual approach to everything: Do you hate to review your work? Do you despise to go through spreadsheets, financial papers, and tax documents? Remember, a single mistake can cost you thousands of dollars. So, if you’re one of those people who submit papers without checking them properly, then it’s better to hire an accountant.
Ultimately, . If you have 4 rental properties, a broad and diverse investment portfolio, lots of dividends and a separate business, then it’s best to hire a tax accountant. But, when you have only a mortgage and W2 form, you can think about filing income tax returns on your own.
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