Yes, it’s that time again – TAX SEASON! Most people dread this time of year like the plague. Not only are you likely recovering from holiday expenses, now you have to worry about the extra amount Uncle Sam will take from your hard-earned income. Or, perhaps you expect a refund of some sort. Either way, filing your tax return is inevitable and growing more and more complex. Don’t fret; following are some things to consider during the process, along with some resources that will help you along your way.
Go it alone or hire someone? The answer depends on many different factors and can become a quite confusing question to answer. I urge you to understand that regardless of if you file your return on your own, or hire an Enrolled Agent or CPA, the legal responsibility of a correct tax return filing falls on you, the taxpayer. Of course, this doesn’t make way for the tax professional to commit a crime, fraud, etc., but it does mean that they can only assist you to the extent you provide them accurate and complete information.
You may benefit from a tax professional if you own real estate, have a lot of out-of-pocket medical expenses, run your own business (or even hobby), work as a sub-contractor, you or family members are college students – really anything that makes the return more complex. However, think twice about hiring a professional if all you have is a job or two between you and your spouse, and receive your Form W-2’s. In this case, the return is not complex and likely doesn’t warrant the $100 or so professional filing fee.
If you’re a military member, look into services offered through militaryonesource.mil. They provide free filing through HR Block’s online software program. Various organizations also provide free assistance through the IRS Volunteer Income Tax Assistance (VITA) program.
To claim or not to claim? Simply put, far too many people make tax filing overly complicated because they think they can claim deductions and credits for everything under the sun. In fact, while there are a good number of such credits and deductions, knowing which ones to claim and exactly how to go about doing so is key. It’s good to get a second opinion as to your specific situation if you feel a bit overwhelmed.
Don’t Forget the State! Here in Arizona, we are subject to State Income Taxes. There are various credits and deductions which may or may not be available at the federal level. If you missed the boat in capturing State credits before the end of the year, you can rest assured that you’ll have another chance this year!
Please feel free to contact us if you have any questions!