The question many people run into around this time of the year is:
Should I attempt to file taxes on my own, using one of the popular software programs out there? Or find a local CPA firm to assist?
It’s a great question – and there is no universally right answer.
Let’s look at a few deciding factors:
There are some people out there that saw the title of this blog post and immediately knew they didn’t need to read any further. Online software programs have undeniably made filing a tax return easier for those with minimal amounts of activity. It’s those that have a certain amount of complexity who may wish to consult a CPA firm. Comfort level is the best way to measure whether or not a tax return has become too complex to attempt on your own.
Many people think about the ramifications of taxes for the same amount of time that it takes to complete their tax return, if at all. As CPAs, taxes are our profession – we advise beyond simply tax prep, on a year-round basis to many of our clients. Many people do not realize the benefit they’re missing out on by not having a CPA at their disposal when life decisions need to be made. For CPAs, preparing an individual’s taxes is a process that is used to become familiar with a client’s complete financial picture. With this familiarity, advisors are able to assist in planning for the future - an example being how the new tax law will impact you personally when it's time to file your 2018 tax return.
Major Life Events
Piggy backing off of Support, there are certain major life events that can have a big impact on the way you file your taxes. Examples of such events are endless – think purchasing a new home, retirement, getting married, having a child, etc. Online tax programs will certainly ask you about major life events, but the conversation unfortunately stops there.
1099 Brokerage statements are not always easily understood. From classifying
income/capital gains correctly to making sure tax-exempt amounts are not taxable to the
proper taxing authority, investments in many cases create complexity on an individual’s return.
What deductions can you take? Are large purchases expensed or capitalized? Have you
accounted for depreciation? Rental Properties tend to make individuals hit the “uncomfortable”
stage when preparing their own returns, whereas CPAs can ensure each property’s tax
treatment is accurate and deductions are maximized.
There are numerous scenarios that could create an income source that individuals are unfamiliar
with. This is usually a sign that a CPA firm should be consulted.
These are factors to consider when deciding whether or not using an online tax software makes sense for you. Whether you are someone who feels comfortable handling your own tax situation, or someone looking to build a relationship with an advisor, be sure to do your research!
No one wants to leave money on the table (or rather in the government’s hands) that is rightfully theirs! Minimize that tax liability and maximize those refunds!