Only Do Taxes Once and Do Them Perfectly

Like it or not, the beginning of each new year serves as a reminder that tax returns will need to be filed by the annual deadline of April 15. As tax information starts coming in the door, each taxpayer has to start making decisions about how to handle their tax returns for the year. The people who are due a refund will most likely be looking to file their returns as early as possible. For those unfortunate taxpayers who probably owe money, the filing process will probably happen very close to the deadline. When someone is preparing a tax return, the return must be done correctly the first time. Failure to do this could result in consequences like tax penalties and interest fees. The question at hand is, “should a taxpayer prepare their taxes or hire an accountant or professional tax preparer?

Filing Yourself vs. An Accountant

Each taxpayer has the option of preparing their tax returns or relying on a professional. To make the right decision, an understanding of the benefits of each option would seem to be in order. If someone chooses to do their returns, they of course save money unless they buy an expensive software package. That is not really necessary because the IRS offers a free filing tool and some packages are more affordable than others. Also, self-prepared returns don't require having to make and show up for an appointment. The issue people who are filing their returns often encounter is complications in tax laws that they don't understand.

The main advantage hiring an accountant offers is their level of training and expertise. Because they live the tax code every day, they are less likely to make mistakes. Also, they are less likely to miss deductions to which the client is entitled. That alone could add up to substantial tax savings, enough to offset what the accountant charges to prepare the tax return. As a rule of thumb, the decision should be made based on the individual's confidence in their ability to prepare the perfect return. If they can, that is great. If they have doubts, it might be best to hire a professional.

Popular Tax Software

Should someone decide they want to prepare their taxes, there are a number of good tax preparation software packages out on the market. Before making any purchase, it would be a good idea to check out the free tax filing tool the IRS offers.

If someone is looking for software that is a little more comprehensive, the best choices would include TurboTax, H&R Block, and Jackson Hewitt Online. All three platforms offer an interview process that takes the user through the entire tax preparation platform. Each package also offers a wide range of products. Products range from packages designed for people with simple return issues all the way up to versions for people with very complicated tax lives.

The main advantage to using a popular software platform is it lessens the likelihood that the individual will make costly mistakes. At the end of the day, the IRS wants good returns regardless of which way the liability points.

Common Mistakes Made on Taxes

The secret to filing perfect returns is not making mistakes. Unfortunately, there are a slew of common mistakes that the ordinary taxpayer makes when they file their own returns. These common mistakes include:

• Missing out on legitimate deductions
• Forgetting to include a key source of income
• Forgetting to include the tax TD number (Social Security number) on the return
• Not checking and rechecking the math
• Choosing the wrong tax filing status
• Proper listing and inclusion of charitable contributions
• Missing the filing deadline

Making any number of these mistakes could end up costing the taxpayer money. While filing taxes on one's own might be more affordable and convenient, there are risks. For that reason, hiring a good accountant or tax preparer would be the right choice. It takes stress off the taxpayer and ensures the likelihood good tax returns will be sent to the IRS on time.