Taxes are complicated, especially if you'd had a life change like a new job with better pay or a new baby.
Taxes are necessary because they give the government the funds they need to run a country. Taxation accounts for more than 80% of total government revenue in around half the countries across the world.
But nothing is worse than paying too much in taxes, or owing money when tax season rolls around.
The average refund this year was 8% lower than it was the year before. Whether it's because taxpayers are underreporting or because they aren't maximizing on their deductions. Refunds are usually higher for those who find a tax advisor.
When you start to earn more, it's especially important to find a tax advisor. Here are 7 reasons to look for a tax consultant before you file!
1. Something Has Changed
Since we already mentioned it, we'll tackle this reason first. If you're suddenly earning more money, you may find that you've fallen into another tax bracket. If that's the case, you should invest in some tax preparation services.
Many exemptions, credits, and deductions phase out when taxpayers start making more money. This is why it's essential you have a tax plan so that you don't end up owing more than you should.
A seasoned tax advisor will know precisely what to look for and what questions to ask to ensure you're getting back what you deserve.
2. Time Is Money
Especially if you're earning more, your time is money. To do your taxes, you need to gather forms like W-2s and 1099s, look through receipts, and check for write-offs.
Taxes usually take a few hours at the very least, and on average, they take around 8 hours.
So if you're wary about hiring someone to do the job for you, figure out the cost of you losing money by spending time on your taxes vs. how much you'll have to pay your advisor. The chances are that the odds will be in favor of hiring a professional.
Plus, if you're a busy parent or spouse, opt to use that time you'd spend doing your taxes taking your kids somewhere fun or taking your partner to dinner.
3. It's the Best Way to Save
The United States tax code is thousands and thousands of pages long. If you had broken bone, would you do your own research to set your bone? You'd probably opt to see a doctor, and an orthopedic one specifically.
So why claim to be an expert on tax code when a professional can do all that work for you? A tax advisor will be able to save you every single penny that is feasible to keep. They're familiar with that very long book of tax code, so they'll be saving more for you and your family than you could save yourself.
4. You'll Safeguard Against Audits
It doesn't matter how much money you make. Audits happen to taxpayers from all different brackets, and one could very well happen to you.
When you're audited, and you have a tax advisor, you can rest easy knowing that someone who knows the ins and outs of the IRS is on your side.
Plus, audits take time, and they require correspondence. If you have a tax preparation service, they'll be able to handle all communication and make sure any required paperwork is filed.
While you may have to dig up old receipts and find any necessary materials, your tax advisor will help you organize it and will be by your side throughout the entire audit.
5. They'll Review Your Previous Returns
When you hire a tax advisor, they can also look through all your old returns. If any deductions were missed, they'll amend them for you. You'll be able to look to the future knowing that you are square with the IRS from your past and going forward.
6. You Have Foreign Income or Rental Property
If your tax situation is not cut and dry, it might be in your best interest to seek expert help. If you have received any foreign income or if you have a property in the United States that you receive rental income from, it's smart to hire a tax consultant.
If you have stock investments that generate income in a foreign country, you have to declare that income in the United States, by law. It's important to make sure you follow these regulations and file correctly so that you don't incur debt or end up paying more than you should.
If you rent your home or antoher property you'll need to file a Schedule E. This form can get complicated especially when you start trying to calculate depreciation. Since it's a business property you also might have to pay a gain when you sell (you get an exemption on your homestead), planning ahead should help minimze this tax hit.
7. You'll Stay in the Loop
More words are added to the tax code every year. Plus, there are updates in tax laws every year. If you have tax professionals by your side, you'll be updated on all these changes. There might be something new that applies to your situation, and your advisor will be the first one to tell you and to adjust your tax prep accordingly.
Find a Tax Advisor for Peace of Mind
Some experts claim that the chance of getting audited increases as your income does. If your income is suddenly higher, it's essential that you find a tax advisor to make sure you're filing the right way and getting all the benefits you deserve.
Tax professionals will help you if you get audited. They'll make sure you're saving all that you can and getting the biggest refund or owing the lowest debt that's possible in your situation.
If you're married, they can weigh the costs and benefits of you and your partner filing jointly or separately.
A tax advisor will save you time and money by doing your taxes for you. Plus, they'll be privy to any new deductions or tax law changes that may apply to you.
Are you curious as to how much our tax services cost? Fill out this easy form and get a tax preparation quote.