The US federal government paid out $260.9 billion in tax refunds in 2019. Did yours get lost in the mail? Are you wondering why you got little or none of those refund dollars coming back to you?
If you’re one the many Americans paying more taxes or getting smaller refunds, tax season might make you more than a little on edge.
Are you hoping to find some hidden deductions or try to save yourself from paying even more in taxes than last year? Are you wondering “is it worth hiring a tax professional” to save some money?
Read on to learn about then you should consider hiring a tax specialist and the advantages of doing it.
When Should You Consider Hiring a Tax Specialist?
Fed up with paying so much in taxes and looking for a way to keep some of your own hard-earned money in your pocket? It might be time to hire a tax specialist to help you with your tax strategy.
What is a tax strategy? A tax specialist can help you with arranging and investing your money in a way to help with the high tax rate. They can help you with wealth management strategies so you keep some of that money you earn, instead of paying it all in taxes.
You might be thinking I don’t have “wealth,” it’s probably a waste to hire a tax specialist. The truth is that if you make money and pay taxes, it’s smart to hire someone to help save on how much you pay in taxes.
Here are some unique scenarios where you should absolutely hire a tax specialist to help you with your tax strategy.
Business Owners and Self-Employed Workers
If you fall into one of these two categories, you should be hiring a tax specialist.
Business owners may have write-offs through the business they aren’t utilizing. There may be ways to manage money from within the business to shield it from taxes.
You are an employee of your business and the business has assets and wealth. Hiring a tax professional can help you plan where to put your money for the best tax advantage.
As a self-employed worker, you don’t have a company or boss taking taxes out for you. This means you need to have a plan for taking care of taxes along the way. Likewise, there are often unique write off opportunities you don’t want to miss.
Buying or Selling a Home During the Year
Have you bought or sold a home this past year? Do you plan to sell your home or buy a new one in the future? What about buying a second home or vacation property?
There are some tax laws to consider if you plan to buy or sell real estate over the course of the year. Capital gains or capital losses can impact your tax liability.
If you own more than one home, where you establish your permanent residency can be significant for tax planning.
Selling Investments or Assets
A capital asset transaction is any sale that involves stocks, securities, bonds, or any other investments.
There are many rules related to capital assets and taxes. Capital assets must be declared. There are caps on the write-off amounts.
The thing to know here is that the laws about capital assets and your tax liability change all the time. You want to consider hiring a tax specialist because it’s their job to keep up on the laws and how it can impact your tax strategy.
Dependents and Those Who Get Financial Support From You
You already know that your children under the age of age 18 and those in college are dependents. They can be used as part of your tax write off because they depend on you.
Did you know that you might be able to use others for your tax strategy too? Maybe you give money to a parent, sibling, or their kids. If you regularly give money to them and support them financially, they too can almost always be considered a dependent.
Dependents are important deductions and need to be included in your tax plan. A tax strategist will know who is eligible to use a dependent.
Why Should You Hire a Tax Professional?
You know some of the times when it makes sense to get a tax professional involved. Now let’s cover why you should hire one? What advantages does a tax professional offer that makes it worth hiring them?
Complicated Tax Code
Tax codes are changing all the time. This makes it challenging for the average person to keep up with the laws related to them. It’s the job of a tax professional to be up to date and aware of the laws and changes from year to year.
Mistakes are Bad and Potentially Costly
Making a mistake with your taxes can mean big trouble for you The IRS can decide to run an audit. If you haven’t paid enough taxes, you can be fined.
Plus, you don’t want to miss out on possible deductions you miss because you simply don’t know about them.
Address Questions and Areas of Concern
A tax professional is going to be able to answer your questions related to your taxes with educated information. They can also look at your taxes and recognize potential areas of concern.
It’s better to let them catch a mistake than to have the IRS find it.
Year to Year Planning
Even if you haven’t used a tax professional in the past, now is the time to start. They can look at your previous tax returns. If any deductions or tax credits were missed, your new taxes can be amended.
They can also create a long term tax plan for you.
Audits happen, even to the most fastidious tax planner. When you work with a tax specialist, they know your taxes like their own and can help you manage the audit process.
Is It Worth Hiring a Tax Professional?
Is it worth hiring a tax professional? ‘By now you should be convinced of the many benefits of hiring a tax professional. Let them help you with a tax strategy that saves you money.
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