8 Things to Know About Divorce and Taxes
If you’re filing for divorce, or find yourself recently divorced, it’s imperative that you understand how your changing marital status...
Everyone has a different situation and while some would benefit from preparing their own return, there are a number of situations that would prove hiring a professional worth while. For instance, the value of your time should be considered. IRS estimates the average individual with a business spends 21 hours preparing their own 1040 and schedule C. Those without a business average about 8 hours. When referring to businesses that have their own filing requirements (i.e. Corporations, Partnerships, and S-corps) the time invested in properly reporting its activities shoot up dramatically. While its true that even if you hire a professional, the burden of collecting your documentation is still on you, at least you can save some time in the reporting, preparation and filing aspect.
Additionally, the general complexity of your situation should also be considered when determining if hiring help is worth the cost. If you are simply a W-2 earner with minimal investments, most do-it-yourself tax softwares work fine. On the other hand, if you operate a business, own a few investment properties or sold investments during the year, it may be worth considering some professional assistance. While comprehensive tax software can usually handle these more complex tax situations, it cannot talk with you about your plans that could affect your taxes. A tax adviser can offer insight into tax law changes that might affect you and whether you should make certain moves now or wait.
Also important to mention, the headache of dealing with the IRS is one most people do well to avoid. By signing your tax return, you are responsible for all the information on the forms. If you do your taxes yourself, that means you're the one the IRS will come to with any questions, which could occur years after you've filed. The higher your income, the greater your chances of being audited. Having a preparer with a CPA or EA license will allow them to represent you in front of the IRS and save you the time and headache.
Get the latest posts delivered right to your inbox