4 Signs You Need Professional Help with Your Taxes
Tax time comes every year, like the seasons and the sun. You want to be ready to prepare your tax return. Otherwise, the federal agents will come calling, and start charging on any missed payments. Knowing your tax calendar can help with that, but sometimes external assistance from an expert can help. Consider hiring an accountant or accounting service to proactively prevent levies and seizures of property.
When do you need an accountant or more than basic tax software? There are some flags that will notify you when your finances need an outside perspective. Identify these flags ahead of time, and set your mind — and wallet– at ease.
1- You Always File Late.
Generally, most people have to file individual income taxes by April 15 of each year, factoring in the time needed for the government to clear it. If freelancers or other individuals make a certain threshold, they have to pay quarterly taxes. Usually, these returns are due on the 15th of January and April respectively, as well as the 16th of September.
You could have many reasons for filing late. It could simply be that during the spring, life disrupts your finances. Suppose you have a family emergency, a layoff, a natural disaster; all these events can break routine. Or you feel overwhelmed when trying to calculate income and adhering to the new rules. Regardless, you either need to pay or file an extension. Failing to do either is not a good approach.
Filing your taxes late will cost you, literally. The Internal Revenue Service (IRS) will charge you a late filing fee starting at 5% of your unpaid taxes by the month. This means that the longer you go without filing your annual taxes, the more money you’ll end up paying. In the worst case, you’ll face liens, levies, garnishments or seizures. The debt will also potentially affect your credit negatively.
If you’re expecting a refund, but still filed your taxes late, then be prepared to deduct at least 5% from every month you’re late. If you end up owing, then go ahead and add 5%. Whatever the reason is that’s preventing you to file on time, you can avoid this nasty 5% penalty by hiring a professional to take care of your taxes. Your credit will also thank you for making the effort and leaving the returns to the experts.
2- You Own A Business.
Business taxes are going to be handled differently than your personal taxes, even if you are a Sole Proprietor. When you’re operating a business, you need to account for all of your income as well as expenses—and this needs to be separate from your personal income and expenses!
For some taxpayers, organizing these debits and credits might get confusing. You may not know if you want to do single ownership, a limited liability company (LLC), partnerships, or a corporation. Businesses depending on the type have varying. That’s why it’s not at all uncommon to hire professional help to take care of your business filing at the very least.
Practically speaking, a professional can also identify potential areas for deduction and help make your business reduce fixed costs. If they track your business’s charitable donations, for example, then an accountant can decide which donations would assist with deductions. An accountant can also determine the benefits of converting from single ownership to an LLC.
3- You’re Paying Back Taxes.
If you are already paying taxes on a past filing, this is a surefire sign that you might need some professional assistance. This is because you’ll have to account for your personal outgoing expenses—including that which is going to the IRS.
A professional tax preparer can better assist you with organizing your finances when it comes to reporting what has already been paid versus what more you’ll need to pay. There might be an instance where you’re expecting a refund, yet still paying back taxes. This can get a little complicated when it’s time to explain this to the IRS, so you might be better off letting a professional take care of it for you.
4- A Major Life-Changing Event Has Occurred.
Did you get married, divorced, have a baby, or buy a house? Such life-changing events can affect your income boosting or possibly even reducing you to another tax bracket.
Buying a house is a property investment; you are increasing your credit if you make payments on time. But are you identifying all the potential deductions and mortgage rates that could assist you? Managing a house — renovations, maintenance, moving in — could leave you with little to no time to find where you can save on expenses. You would rather have an expert point out if you could pay smaller payments on interest, especially for a mortgage that is thirty years long at a fixed rate.
Marriage could lead to a boost in income, or another dependent if he or she isn’t employed. That drastic change can make taxes muddier, especially if you pragmatically decide to have separate accounts after signing a prenuptial agreement. You especially may find your federal tax return muddy if both you and your partner itemize deductions.
Having a baby means that you have a definite dependent. Claiming a dependent on your taxes can often mean more money in your pocket or paying a lesser amount in taxes. Read our article, “Who is Classified as a Dependent on Tax Returns?”.
Whether you’re getting married or divorced, this could mean an increase or decrease in your annual income. If you’re divorced, maybe you’re paying or receiving alimony. If you’re married, you may be adding to your annual income.
Child support is another factor in the case of divorce. If you are paying, you can mention it as a deduction, and vice-versa if you are receiving for your child. It can even be worse if a former spouse is late on their payments, and you still owe taxes on the support! An expert can ensure that you keep track of the payments and how much is owed.
Try Our Services At Success Tax Relief!
You may have made a mistake on your last annual filing and don’t want to repeat it, or you might just be too busy. Success Tax Relief takes pride in ensuring that you will never miss another tax deadline. We’ll identify potential deductions, important dates, and important payments.
For a free consultation, contact us online today! The professional tax experts at Success Tax Relief has over 30 years of experience helping taxpayers get the most out of their tax filing.