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Familiarizing yourself with tax codes can be challenging and with constantly changing tax laws, it can be hard to determine how much you owe. While preparing your taxes can save you money, this could cost you when you make a mistake. Working with a specialist like Troy, MI CPA in tax preparation and filing means spending money on their services; however, it could be worth it if it can lower your tax bill or increase your tax refund.
Weighing the Benefits and Drawbacks
Preparing your taxes without help lets you save money. Tax preparation fees tend to vary; however, you may pay at least $150 for a return. For a complex tax situation, this fee can run into hundreds of dollars. Tax preparation and filing can be done using paper forms or electronically.
A lot of websites provide affordable or free tax preparation services. Depending on your software, checking your tax return for errors can be possible. Also, you may be able to evaluate your audit risks before filing your taxes.
In addition, filing your taxes means not sharing your personal details with a stranger. However, this is usually time-consuming, particularly if you don’t understand the various tax rules. A simple return could take hours to complete. While you can speed up the process by using online tax software, it can be hard to get help whenever you have a question or encounter an issue.
There is also the potential for error. When you do your own taxes, mistakes can be made. Numbers can change because of where the decimal point is placed. Also, issues can arise when you add the numbers wrong. If the IRS processes your return, such an error becomes clear. As a result, you could get a hefty tax bill.
Factors to Consider
When choosing between DIY tax preparation and filing and hiring a tax expert, consider the following factors:
- Your tax situation. It may be fine to file your own taxes if your filing status and income have not changed. But if you have changed jobs, gotten married, or gotten a raise, consider getting expert help.
- How you approach deduction. Do you want to itemize deductions or take the standard approach? You may want to itemize deductions for business expenses, charitable donations, or medical expenses to lower your tax burden. However, it can be hard to determine the amount to deduct. In this case, you should consider hiring a tax professional.
- Business ownership. Doing taxes gets more complicated if you incorporate business expenses. As a business owner, you must follow different tax rules. A tax expert can help you navigate these rules.
