It’s due the same time every year. You’re reminded of it every time you look at your pay statement. Regardless those facts, you may find yourself scrambling to file your taxes at tax time. Despite knowing all the civil benefits your tax dollars provide, you still have mixed feelings about having to pay that tax bill. Yes, you must file and pay taxes every year unless you want to risk financial penalties and maybe even jail time. However, to make the task a little less painful, you might be tempted to reduce the amount of money you put toward this mandated endeavor by preparing your taxes yourself. But is this really the smartest move?
Preparing your own taxes might leave a few extra dollars in your wallet but not hiring a professional tax consultant, certified public accountant, or just visiting one of those tax prep agencies, might have you paying more taxes than is necessary.
The question at hand, isn’t whether you should pay your taxes. The question is: How should you go about preparing your taxes?
You’re just entering your tax-paying years:
- You’re a teenager or a college student with your first job.
- You own no property and your parents still support you.
In this instance you may not need to file taxes until you start making a certain amount of money. But, once you do, you likely can get advice on how to file from your parents. Do they have an accountant they consult every year? Or do they just go to a tax prep agency? Maybe you start using tax preparation software online. This process is quick and easy if you have a straight-forward tax situation and all it takes is a few hours or less to get it done.
You’re mid-career and you have begun to accumulate assets:
- You’re working and you contribute to retirement, flexible spending, and health savings accounts.
- You have dependents.
- You own a home and/or you’ve started a business.
While some people still prefer to maintain control over filing their taxes, now is a good time to at least begin the habit of consulting a tax professional. With the increasing complexity of your financial and professional life, it will take more time to make sense of the tax laws and compile your documentation. So now seems like a good time to seek advice to maximize any potential tax savings benefits.
Aside from all the tax strategies a tax professional can recommend to save you money every year, a tax professional who is also an enrolled agent can represent you in the event of an audit. At the very least, a tax professional will help you navigate the ever-changing and complex tax laws that dictate how much you owe, what deductions you can claim, and how your personal circumstances and financial choices might affect your tax obligation.
If you take the time to consider your tax situation ahead of tax season, filing your taxes will become just another task you cross off your annual to-do list.