When it comes to preparing your tax returns, you have options. You can complete a tax return via the IRS website. You can use tax software. Or, you can hire a professional—an accountant, a CPA, a tax lawyer, or an enrolled agent (IRS). However, the more complicated your situation, the more likely you are to need a professional. Let’s look at some of those complications.
You own a small business
First of all, if you are a business owner, it’s probably in your best interests to work with a professional. Business owners have to deal with self-employment taxes. If you work for someone, your employer will be responsible for social security and Medicare taxes, but if you work for yourself, you are an employer and employee. The good news is that you can also take deductions, but those can also be complex. In both cases—paying taxes and identifying deductions—a professional can help you stay on the right of the IRS while keeping your fair share of the money you have earned.
You have had a major life change
Have you had a major life change? Perhaps you have gotten married or divorced, have had the pleasure of the birth of a child, or bought a home. These life events can add wrinkles to your tax situation that a professional can help you smooth out.
You have stocks and capital assets
Positive situations, such as stocks and capital assets can complicate tax returns, too, causing you to need the advice of a professional. Perhaps you own rental properties, which can complicate returns. Or, you may support someone who isn’t your dependent or child, adding another wrinkle to your situation.
You have failed to file taxes in the past
Sometimes, unfortunately, we need to rectify a past tax problem. It does happen that people simply fail to file taxes as required. Although this can be complicated, and even a little scary, a professional can help you get back in good graces with the IRS.
The IRS has contacted you
If the IRS contacts you, your best option is to work with a professional to make sure you are compliant and work effectively to respond to the demands of the IRS and resolve any issues, whether you have done something wrong or not.
The IRS applies hefty penalties for failing to file a tax return, failing to pay taxes, or failing to pay the proper amount for both small businesses and the self-employed and individuals.
You don’t need the time sink
A significant factor of tax preparation that is often overlooked is time. Do you have the time required to complete a tax return? According to the IRS, 11 hours is the “average time burden” for taxpayers filing Form 1040 or 1040-SR. The average cost is $210 per return. Naturally, tax forms related to a business will require even more time. Keep in mind that if you earned more than $400 from freelancing or contract in a year, you will need to pay self-employment tax, which means additional paperwork and additional time spent.
You don’t have the patience and/or confidence
Time is one thing, but do you have the patience to work through your papers and tax forms? Do you have the confidence that you can do it all correctly? It’s important to factor in peace of mind here. How much is it worth to you to know your returns have been completed correctly? These questions still apply if you use software to prepare your tax return. Are you confident in your ability to use the software correctly and understand all parts of the return?
What we offer
Tax time is just one of the many situations for which you might need a professional. An accountant can work with you on an ongoing basis. In addition to tax preparation, SMC Innovations can help you with bookkeeping on a monthly or quarterly basis. We can provide ongoing guidance and strategic planning for taxes throughout the year. We also partner with other professionals in fields such as financial planning and insurance to help you plan for retirement or save for college, too.
Accountants are immersed in the tax realm year round, so the territory is familiar, and we can typically find more deductions than the average taxpayer. Of course, clients who have clean books (whether they keep them effectively themselves or pay for bookkeeping services) make tax time a lot simpler.
Time is money, and we at SMC Innovations know your time is valuable. We’re here to help you with your tax planning and preparation. With the help of professionals, tax time can be less time-consuming, complicated, and stressful. Partnering with us can help you feel confident and secure about your tax return.