It's safe to say tax season isn't the most popular in America since it is laborious for so many citizens. Indeed, a 2013 Pew Research Center poll revealed that 56% of Americans dislike doing their taxes. There are only two acceptable ways to navigate tax season; prepare your taxes on your own or hire a tax professional to handle this for you. Many Americans would gladly outsource this vital aspect of their personal finance to a professional, but there are some perks of handling it yourself. Here are some of the well-known benefits of preparing your taxes personally.
Saving money in personal finance is always an advantage, and tax filing is no exception. As per the National Society of Accountants (NSA's) 2020-2021 survey report, the average hourly rate of a certified public accountant (CPA) for filing federal or state tax returns was $180. This rate can be costly, so you can save a lot if you handle your taxes personally. Thankfully, anyone can file their taxes electronically and for free through the IRS website. You can fill out and submit your tax forms online, available through the IRS site, irrespective of how much your adjusted gross income (AGI) is.
Taxes are, admittedly, not the most fun or engaging topic to immerse oneself in. Be that as it may, it is prudent to have a great grasp of your financial realities monthly and yearly. This way, you will know how much cash you have to work with and whether your finances improve or worsen with each tax year. You can also increase your tax knowledge by learning more about the process, helping you avoid or lower your taxable income legally. For instance, you may never realize how much cash you can deduct by making tax-deductible donations until you start filing taxes on your own. Similarly, you will easily know that you don't need to enter anything from your Form 3922 if you didn't sell any Employee Stock Purchase Plan (ESPP) stock during the tax year. As such, you will be less confused about what to do when you receive this form from your employer.
Several tax experts are, without a doubt, knowledgeable, reliable, and efficient experts. However, as with any other profession, there is always the risk of encountering a less-than-ethical professional. Indeed, the IRS routinely investigates CPAs, tax attorneys, and enrolled agents who turn out to be fraudsters. These people are skilled at falsifying deductions, income, or dependents to produce a large refund for their patrons, among other offenses. There is always a chance that you can hire a fraudulent tax preparer during tax season, putting your finances and personal information at risk. In addition, sharing your financial information with anyone is inherently risky, so you aren't completely safe even if you hire a genuine preparer. Even the most ethical and conscientious tax professionals can fall victim to hacks or break-ins. Luckily, you can monitor your money and personal information when filing your tax returns with your computer to guarantee safety.
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