Filing your tax returns can be a stressful and overwhelming process. Let’s face it; understanding the tax code isn’t everyone’s cup of tea.
However, since one-third of Americans are doing it, it shouldn’t be too difficult, right?
Well, not exactly. Filing your own taxes is fine when you have pretty straightforward financial conditions, but when you have multiple revenue streams or investment portfolios, things can get tricky. In those situations, your best bet would be to rely on a professional tax service.
In this article, I’ll talk about when you should think about hiring a professional for your tax returns.
When DIY Tax Prep Makes Sense
There’s nothing wrong with filing your own taxes. In fact, it’s better to file taxes on your own instead of going to a professional if your financial situation is pretty straightforward.
Besides, with the rising popularity of tax software programs and online filing tools, it makes no sense to spend money to crunch your tax numbers.
When you go with a professional tax preparation service, you’re looking at a pretty big expense. By going the DIY route, you’ll be able to keep more of your tax returns.
As long as you have a good understanding of the filing process and how these online tools or software work, doing your own tax prep is a smart choice.
When to Hire a Tax Professional
While doing things solo may work for simpler situations; there are circumstances where you would rather have a professional tax service at your side. Here are some of the many scenarios where hiring a professional tax service is the wiser decision.
- Complex Financial Situation
When your financial life becomes more complicated – think investment properties, international income, complex business dealings, etc. – the tax implications can get quite tricky. At that point, it’s best to steer clear of the DIY route and go with a qualified tax service professional.
- Major Life Changes
Major life incidents marriage or childbirth, buying a home or even going through divorce can bring a lot of complications to your taxes. While you could do things on your own, I would recommend going with a professional tax service to develop strategies to minimize your tax burdens.
- Audit Risk
If you’ve been selected for an IRS audit in the past or have concerns about potential red flags on your return, working with a tax professional can provide valuable protection. They can act as a buffer between you and the IRS, ensuring proper documentation and thorough preparation.
- Ongoing Tax Planning
Beyond filing your annual return, a financial advisor’s guidance on planning for tax optimization can be valuable. From developing comprehensive tax planning strategies to adjusting withholdings and making proactive financial decisions, you just can’t put a price on that.
Get in Touch
A financial professional who knows the ins and outs of the federal tax code can be an invaluable asset towards preserving your wealth and getting you the best returns on your taxes.
Get in touch with me today and let’s get your taxes sorted the right way!
Please note, changes in tax laws or regulations may occur at any time and could substantially impact your situation. While familiar with the tax provisions of the issues presented herein, Raymond James Financial Advisors are not qualified to render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional.
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