A new year is upon us, and that means tax returns! While you have until April 15th to get your taxes filed, waiting until the last minute is never a good idea. Have you thought about the best tax preparation for your situation? Will you use the same person or system that you used last year? Have your taxes gotten more complicated? Did you start a business last year? Don’t forget state taxes! These are all questions that should be asked when determining the best tax preparer for you. The CGS Team is sharing some insight on how to find the tax preparer that is best for you. Don’t spend more money than you have to.
Finding the right tax preparer for your situation…
Simple Wage Earner
If you go to work every day, don’t own a home (yet) and receive w2s for the work you’ve done, then you are a simple wage earner. Your situation does not require you to meet with a tax preparer or have your own CPA. In fact, you can use budget-friendly TurboTax or H&R Block’s online filing systems to file your taxes.
These systems often charge for more complicated tax situations, but for simple wage earners, they are your best bet. The systems are easy to use and essentially dummy-proof since they walk you through every aspect (with pictures)!
1099 Income Earner
If you are self-employed or a contractor, then you likely don’t pay taxes throughout the year. This means that you will be for all of your taxes when you file. Hopefully you are keeping track of your income and expenses throughout the year via a Profit and Loss statement. This will make it much easier for you when it comes time to file.
If you are detailed and keep track of all of your information, then you may still be able to file your own tax returns. TurboTax, H&R Block and TaxACT all offer cost effective services for you to file online. If you receive income through multiple streams, you may be best off referring to a tax professional. H&R Block has branches across the U.S., so meeting with them for some guidance isn’t a bad idea.
Homeowner, Investor, or Itemized Returns
When you own a home, invest, or opt for an itemized return, as opposed to the standard deduction, your tax situation gets more complicated. As long as you receive and keep track of the proper forms mailed to you (1098 Mortgage Interest, 1099 Loss/Gain reports, etc.), you should not have a problem filing your own returns.
If you are an investor and lost more than $3,000 in the stock market in 2015, the additional amount can be rolled over into your 2016 tax return. This is a situation where it’s best to speak with a tax rep, especially if you are filing yourself. Confirm that the proper documents are filed to ensure your rollover can take place next year. Most online services have walkthroughs and available agents to assist when you are filing.
If you own a corporation or a business that is taxed as a corporation (whether S-corp or C-corp), then your business is required to file its own return. This filing is required to be completed by March 15th of each year. This gives the company 30 days to provide Schedule K-1s to the company’s shareholders. If you need to complete a business return, it’s best to do so with the help of a CPA or tax professional. Using a system like Quickbooks throughout the year to track income and expenses will come in handy for filing time.
Similar to the Homeowner, Investor and Itemized Return section, other tax situations can be handled by yourself if the right paperwork is received. Filing online is available to every tax situation, but as you get into the itemization, deductions and credits, that’s where a professional can assist. If you know someone with their own business, ask them for a tax professional reference.
You can also look up certified accountants in your area at GoodAccountants.com. It may be best to file with an accountant this year, ask questions, and apply what you learned when you file online next year. Most tax preparers don’t get paid until they file your return, so be sure to ask how they prepare it. Have them walk you through the return and you will be a pro for next year!
Related: 6 Life Events that Trigger Taxes
Most young people don’t need their own CPA or tax professional, TurboTax can take care of everything. Make sure you take your time with it so you don’t miss out on any tax credits or deductions that may apply to you. Check out the Finance 101: Tax Credits and Deductions article for a list of the most common ones. How do you file your taxes? Do you have any tips or experiences you can share with the group? Leave a comment below and let’s discuss! We all have to file taxes, so don’t be shy to share!