Sure, you can buy software that will guide you through the tax process, for about $50 or less, so why would you pay $500 or more? Well, you can also cut your own hair and save $25, but would you? And you can also represent yourself in court, and save the attorney's fees, but would you? Of course not, you want to hire an expert who is trained and can give you the advice you need.
Doing your own taxes might leave you at risk of making mistakes and possibly expose your return to more scrutiny by the IRS.
What if you forget (or simply didn't know you had to) attach required forms to your return? If you depreciated an item last year, and didn't include it this year, it might raise a flag.
And the list of potential issues goes on and on.
Tax laws are overwhelmingly complex, and they change so frequently that it is very easy to overlook something; a mistake that can cost you money.
A good CPA will stay on top of these changes and can give you advice about deductions that may not come up using software, simply because there are so many variables involved when preparing a tax return.
When you hire a CPA you will, most likely, save money, work less, and have more peace of mind.
When you prepare your own taxes you may think you are saving the money a CPA would charge you, but if you overpay your taxes (and most people do), are you really saving anything? Our advice is to do some research and find a reputable CPA that specializes in your field.
For example, if you are a teacher, find a CPA that specializes in preparing returns for teachers.
Ask them for a list of deductions that most teachers take advantage of, so you can start putting together your receipts, and be on the lookout for those new deductions.
Do not wait until March to do this! Make sure you start working on it right away, and keep all receipts in a box, so you will be ready by tax time.
Also, once you find a good CPA, ask them if they can review your taxes from the previous year, for you to have an idea if they can save you money.
Often times they won't charge you for a review.
Income taxes are one of our biggest expenses.
Some people pay more money in taxes every month than they do on their mortgage! We have to take this very seriously, and stop overpaying our taxes.
And if you are in debt, you absolutely should not overpay.
Use the extra money to pay down your debts.
Your goal should be to get out of debt as soon as possible.