I am not an electrician. I have installed many ceiling fans over the years however and understand the concept of matching the little wires with different colors. Since I understand the basics, maybe it’s time to rewire some outlets in my house or install that junction box outside so I can add those landscape lights from my “honey-do” list. If I chose to follow down that path, there are some things that I simply don’t know how to complete. What is the standard (aka city code) regarding junction boxes for electricity outside? How many lights can safely be added to that system? Where should it be placed? Must I insulate it or bury it a certain depth? Ok, just talked myself out of it.
- You are an expert in something else. Whether you are an employee of another company or you run your own business, your expertise is in your industry. When you choose to use off-the-shelf products for tax returns, you assume the same things as my story above. “I know where things go in the lines on the return, I can do this myself.” How much have you studied the tax law changes over the last few years? Are you fully educated on what qualifies as a deduction? What types of deductions can you take for your small business? Do you know what is required to comply with the ACA? As a Certified Public Accountant in Arizona, I am required to take 80 hours of training every two years to maintain my license. As a result of all that class time and the associated networking, I’ve likely either learned about or discussed a situation much like yours sometime during my career. Your obligation is only to pay the taxes you are legally responsible for. Without a professional guiding you, you could be paying too much.
- Software can’t answer questions. Tax planning is an important part of your overall financial plan. When you are about to make an important financial decision, can your software tell you how this fits into your tax situation? If you already utilize the services of a tax professional, he/she will be able to ask the questions to help you make the best decision for your situation.
- What if you make a mistake? The IRS sends letters to those who either don’t file or who made mistakes in their filing. Mistakes from late filing or underpayments can create penalties and interest liabilities. Can your software tell you where you made a mistake to ensure that the IRS correction is correct? Your tax professional can help you wade through the correspondence and even represent you before the IRS to resolve problems.
- You can do anything with software. Most bookkeeping and tax prep software packages will let you put whatever you want into those boxes on the return. I’ve picked up clients over the years who have entered all their data using two different assumptions with wildly different refund results. They always ask which one they should choose. The answer is always, which one represents most closely what actually happened?
A tax professional will tell your financial story through the tax return in the most accurate way possible. They are educated, seasoned and detail-minded and often experts in the tax industry. Why waste your time trying to figure out the byzantine tax system in this country when you could hire a pro who already understands it?