It has often been quoted that the only certainties in life are death and taxes. While people generally die only once in a lifetime, taxes are an annual occurrence and failure to do them properly will result in being audited. Getting audited is an additional headache to worry about, and can end up as a costly and time-consuming affair for you or your business. Since getting audited is an entirely preventable affair, you should stay on top of all of the current tax policies and understand them before filing.
One error can cause a lot of problems, so either do your homework or leave your taxes to a professional who knows what they’re doing. Indeed, hiring a professional can be the best solution, and the additional expenditure can often prove worthwhile if it means more deductibles or simply avoiding getting audited. At no time should you avoid paying taxes or commit fraud, as this can lead to serious consequences for you or your business.
As taxes here in the United States are a political issue and change with every new president, or when the incumbent party loses control of Congress, you might have trouble keeping up with the changes. If Trump Tax Reform has you scratching your head at how things work now, it’s best to hire a professional in order to ensure that everything is up to the mark.
Under these reforms, tax brackets for individuals have changed a bit, while long-term capital gains have remained at the same rate. There has also been a massive reduction in the corporate tax rate, diving from 35% to 21%. On top of some of the tax brackets being lowered, the standard deductions have basically been doubled in order to encourage more filers to opt for it rather than itemized deductions. The fact that some of these itemized deductions and tax credits have been removed also points to encouraging people to go with the standard deduction and reduce paperwork and administrative hassles for all parties involved.
One obvious reason for hiring a tax professional is to avoid being audited since they’re far more experienced with the current tax laws than the average layperson. A professional filer will ask you a whole host of questions in order to determine if you’re filing in line with the current tax laws, and this reduces the risk for errors. The work of a tax professional is still dependent on the person filing, and you’ll still be responsible for any errors. As such, it’s vital to give accurate responses to the questions that they ask you in order to stay out of legal trouble. Aside from the possibility of audits, you should ensure that your returns are accurate because they’re used to verify income for a whole host of things.
It goes without mentioning that audits are definitely a pain, but the advantages of entrusting your taxes to a professional hardly end at saving you from a potential audit. Using the services of a professional can be the ideal solution to your taxes, even in cases where you know the current tax policies since there may, in fact, be deductibles that you’re not aware of. Hiring a professional gives you a better chance of getting more money back on your tax returns, as they are well aware of certain areas that you might otherwise overlook and will point them out for you.
Some folks don’t have any major investments and thus have a relatively straightforward income. In these cases, it’s not as necessary to hire a professional year after year, but it still can be beneficial to consult with a professional every few years just to ensure that you’re not making any obvious errors in filing. Even in these cases, it can still be pretty easy to miss out on certain credits and deductibles and so it might be better to hire a professional to help you with this. Regardless of all of this, it’s noteworthy that Americans spend an average of 8 hours filling out a 1040, and the services of a professional could reduce the amount of time that you spend on this.
