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It’s a risk you can’t afford to take.
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At this point, many people are deep in the throes of finalizing their tax returns. And if you’re working your way through yours, you’re in great shape, seeing as how there’s still some time between now and the April 18 filing deadline.
A lot of people outsource their taxes to a professional because they worry that if they don’t, their risk of getting audited by the IRS might increase. The reality is that filing taxes on your own won’t necessarily increase your audit risk, and using a tax preparer won’t necessarily get you out of an audit. But there is a risk of filing taxes solo you should know about that has nothing to do with audits whatsoever.
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Can you afford to give up money you’re entitled to?
The U.S. tax code is loaded with credits and deductions that can help taxpayers save a lot of money. But some of those tax benefits may not be obvious to the average person who files a tax return on their own. And there lies the danger of not using a tax professional: losing money.
In a recent interview, Mark Steber, Chief Tax Information Officer at Jackson Hewitt, explained that the reason he tends to advise taxpayers to use a professional is that these people know the tax code inside and out, whereas you probably do not. And that’s okay. If you’re not a tax preparer or accountant, why should all of those rules take up space in your brain?
But when you file your own tax return, you risk missing out on tax breaks that could result in a higher refund, or in less money you have to send to the IRS. And at a time when money is so tight for so many people due to surging inflation, that’s not a risk you should be willing to take.
“I see a lot of self-inflicted oversight,” said Steber with regard to people filing their own taxes. And that situation is easily avoidable.
Is a tax professional worth paying for?
You might reap some tax savings by using a professional to complete your return, but in exchange, you’ll pay a fee. So will you really come out ahead in the end? In many cases, the answer is yes.
Let’s say a tax preparer charges you $300 to complete your return but only manages to find you a $250 tax break. You might think you’ve lost money in that transaction because your tax savings this year didn’t cover their fee.
But remember, now that you know you’re entitled to a given tax break, you can look into claiming it year after year. So even if you don’t come out ahead financially right away, in time, you stand to gain.
Now, this isn’t to say that you can’t research tax credits and deductions yourself. You absolutely can. But given that you’re probably not a tax code expert, it may be worth it to turn to someone who is. Chances are, extra money in your bank account would no doubt come in handy right now, and using a professional could be your ticket to scoring some.
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