Taxes can be a headache for many individuals. While there are a variety of computer programs and websites that can be used to file taxes, it can be challenging to get all the tax refund money that you deserve. The following guide explores how a tax professional can help you get the most out of your refund.
Issues Associated With Tax Preparation Tools
When you use self-service tax programs, they’ll ask you a series of questions about your life. These questions are used to determine which tax refunds you’ll be entitled to receive under IRS code. However, a 2015 study by the Whitehall Group showed that individuals who used automated tax preparation tools received refunds that were 12 percent less than people who hired tax professionals. Without expert tax help, it’s difficult to identify all the potential tax deductions to which you’re entitled.
Benefits of Hiring a Tax Professional
A tax professional can interpret and analyze any information you provide to him or her. If you have bank statements and receipts that may qualify for as tax-deductible, you can share them directly with your tax professional. They can then review them to see if they can be used to get you a bigger refund. However, with online tax preparation tools, this isn’t possible.
Most important of all, a tax professional can help you prepare in the event that the IRS decides to audit you. Each year, thousands of people across the United States face a tax audit. The average tax audit can take up to 15 hours of your time. Some tax audits can require you to go through all your financial records for the past 10 years. If you don’t have access to these records, you may face IRS penalties. While most IRS penalties are civil, some penalties may include criminal sanctions. In some cases, this can even result in jail time.
Audit Protection from a Tax Professional
In addition to helping you get a refund, a tax professional can ensure that you’re ready for an audit. The tax professional or accountant can work with you to make sure that your finances are in order weeks before a review is scheduled to take place.
Complex Tax Reporting Requirements
Finally, a tax professional can address tax deductions that require complex reporting. Some types of tax deductions (such as those for pass-through businesses) require extensive documentation which can be difficult when using tax preparation software. By hiring a tax professional to manage this, you can ensure that your taxes are in proper order.