Why Accountants Can Help With Basic Tax Filing
If you have a job but you also feel like your life is pretty simple, you might be confident in your ability to fill out and file your own taxes. Taxes are simpler when you have a basic job, few living expenses, no dependents, and no investments or property. However, you might still be paying too much in taxes, or you might miss some crucial tax credits that could help your quality of life. Here are some reasons why hiring an accountant to file your taxes can still be a good idea, even when self-completing seems simple.
1. You don't miss credits you deserve.
Credits are a big reason why you want to have a professional comb over your finances. Sometimes, people don't even know what credits they qualify for. For example, if you went to school during the tax year, you might feel like you don't need to worry about filing your taxes beyond a basic 1040, because you might not have even had a job. However, college students are eligible for a $2500 tax credit for four tax years. Over the course of four years filing without help, you could miss this credit! If you attended a certification program for a job, you could be eligible for a $2000 credit. If you have a low income, you could get a credit to help offset the cost of health insurance. Many people do not know if they are eligible for available credits, but an accountant would know. You also get tax breaks for charitable donations, and these can vary widely, because some donations do not have reportable monetary amounts, so your CPA can help you know how to qualify them.
2. You want to make sure you include everything.
Sometimes, you don't realize what needs to be included with your taxes. If you pay student loan interest, for example, you can report that paid interest as part of an itemized deduction on your tax return—some people pay so much in interest that it is worth passing on the standard deduction. The more thorough you are with your taxes now, the easier it becomes to correct a mistake or confront an audit later. You also have the CPA there to ask questions if you are not sure about whether or not something needs to be included on your filed taxes.
3. You need to include side income.
Finally, your main job is not the only thing you need to report. You might have a side source of income that is hard to track. For example, you might collect payment in cash for teaching piano lessons to neighbors, playing an instrument for a wedding, baking cookies to raise funds, or tutoring a high school student. These wages need to be reported as income to the IRS, and if it is discovered that you did not report this income, you could see some hefty legal and financial consequences. If you are not sure how to properly report this income or what side incomes actually need to be reported, your CPA can let you know. Self-employed or side-gig incomes are taxed differently than full-time job incomes, and you need a separate form to properly report them.
4. There's less chance of mistakes.
Filling out tax forms yourself can be a challenge, and you might not know how to answer certain questions, even if you are using online software to help you file. If you don't know, for instance, that some military income is taxable and some military income is not taxable, do you know how to report your taxable income correctly? You might be paying too much.
Even with a simple job and few extras, you can benefit with getting consultation from a tax accountant. Contact a company that offers accounting services to learn more.