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Filing your tax return can be done on your own. Especially if your tax situation is straightforward and you have no major transactions for the current tax year. People who file their own tax return find the experience satisfactory albeit time-consuming, as you will be in control of your own financial situation and no one else is made privy to your sensitive data. On average I take around 10 hours to file our return, from collecting documents online (PDF copies) to finally submitting the return.
However, many people find out that filing tax return is taxing and can get complicated. Considering that IRS made a lot of tax code changes, it can be quite challenging to keep up with all the updates and know exactly what your filing statuses are.
We file our joint return using TaxAct, free eFile software. We have been doing self-filing since last 10 years. But filing your taxes yourself may not be advisable on certain scenarios. There is a tame and situation which warrant a professional help.
Here are 10 good reasons why you should hire a tax consultant to file your return:
- Time – On average, it can take up to 8 hours to compile, dig up records and check for write-offs and double checking all your receipts before you can start to file your tax. If you rather spend your quality time doing something you love or with your family, hiring a tax consultant is a good idea.
- Chance of a higher return – With many tax code changes and tax laws to understand, it can take you some time to understand the process, the jargon, and the procedure to file a tax return before you can actually get to do it. Do you know all the codes? If you’re not confident enough to claim every possible deduction, then a tax consultant will ensure you get all the money you deserve from IRS. For itemized return I’d strongly root for a professional advice.
- Professional help – A tax consultant is aware and an expert in tax laws. Getting professional help can go a long way in making sure that you’re not making any mistakes.
- Expert eye – With tax consultant, you will have an extra pair of eyes to look over things that you missed or things you didn’t even know you miss. This can help you a lot in filing your return correctly. When you’re unsure of claiming
- Keeps you updated – You will be kept updated on IRS tax changes and updates in tax laws so you will know what’s going on and what exactly you need to do.
- Foreign Income – If your tax situation is not straightforward, especially if you have received income on the foreign asset you may need to seek expert help. If you have a property in your home country and you receive rental income, or if your stock investments generate income in a foreign country you are required to declare the income here in the US.
- Human contact – Having a real person to talk to is different from having the detailed help from advanced tax software. You’re able to ask details on minor information that could be left out from the tax software and you can get answers until you’re satisfied.
- Future filing – With the help of tax consultant, you’re able to know the right way to file your return. This way, should you decide not to have a tax consultant the following year, you would already have experience and will know what to do and what to look out for when doing your filing the next time around.
- On–going Advisor – You can still have your tax consultant as your tax advisor even though you’re no longer officially hiring him or her as your consultant. This way, you will be able to continuously ask for updates or advice as and when you needed them.
- Accuracy – You wouldn’t want to make errors with your filing statuses. A tax consultant will be able to tell you exactly what to do and how to do it. This way, any errors in filing your return will be eradicated. A tax return can become very complicated and prone to frequent errors when you have multiple sources of income. Wage, tips, interest, dividend, alimony, etc.
When I will hire a tax consultant
Moreover, experts claim that the chance of getting audited increases with income. The below table shows that (although I don’t claim any authenticity of this data) you are very much likely to be audited if your income crosses $1M. So, I’d definitely hire a professional if my income crosses $200,000 for a year.
| INCOME LEVEL | LIKELIHOOD OF AN AUDIT |
|---|---|
| Less than $200,000 | 0.9% |
| More than $200,000 | 3.7% |
| More than $1 Million | 12.5% |
If I ever win a lottery, I’ll hire a tax consultant. If ever sell this blog, I’ll hire a tax consultant. Till last year, we had been filing standard deduction. Last year we became home owners, which helped us moving towards itemized deduction. I thought of trying once myself with itemizing, before seeking help. But TaxACT interface and questionnaires are simple enough for us to file on our own.
I’d also hire a tax professional if I ever get audited by IRS, and I fail for some reason.
But for the uninitiated, I’d strongly urge my readers to seek professional advice if they want to itemize their deduction.
What is the cost of hiring?
It depends on the type of shop you are going to. On average H&R Blok charges $200 from its customers. Other local tax specialists charge a premium for their expert advice and help. On the other hand online tools like Turbotax, etc. Cost less than $100. A lot of people I know use Turbo tax to file their taxes.
When you need a real person to file you return the charges vary based on even where you live at. In general, the harder your return is, the more you’ll pay. If you have investment income and itemized deduction, you’ll pay more. If you have investments across many brokers and banks, you and the professional will both have to spend longer time, so the cost would go up.
As per national average, the cost of filing a simple tax return with standard deduction is $115. Those who itemize, pay about $205. And if you have various 1099 INT and 1099 DIV forms, you expect to pay more than $300.
The only good news here is, the cost of filing the tax return can be deducted from your taxable income. You can deduct professional tax preparation fees as a miscellaneous itemized deduction on their Schedule A.
What can be deducted –
- All fees for preparing a tax return
- Fees for advice on tax planning
- Cost of legal counsel on tax issues
- Legal fees for representation in a criminal tax matter
- Fees for representation in a tax audit
- The cost of tax preparation software
- The cost of tax-related books and other publications you bought
Readers, are you filing your return this year or are you seeking a professional advice? Share what you know with us.
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I think the time and accuracy aspect of hiring a tax consultant are good enough to convince anybody. Tax returns are cumbersome and can be complicated and you don’t want to be hit by penalties simply because you made an honest mistake.
Great article.
Taxes were really hard this year because I have my own business. I like how you mentioned hiring a tax consultant will save you lots of time that you can be doing other stuff with the company or my family. I think time is important and I think money and taxes done correctly are important. I will definitely look into hiring a consultant. Thanks for the information!
Wow, I had no idea that your chances of an audit increases by 3% as soon as you pass the $200,000 threshold. Although it doesn’t seem too significant, it still makes you about 3 times as likely to be audited. At the very least, if you make $200,000 or more, you should at least look for a tax consultant to help you in case you need it.
I’d agree to your point Maggie. If I make more than that amount I’d definitely head toward HR block store.
I didn’t realize that, on average, it took up to 8 hours to gather all the records needed to start filing your taxes. I can see why this would be a good reason to hire a professional. I also think that that way you could also know that you aren’t doing it wrong.
It’s interesting to read about some of the benefits of hiring a tax expert. It makes sense that it could be really time-consuming to file for taxes along trying to figure out all the ways you can save. It’s something to remember because a tax expert would be able to help people find ways that they can file more easily and quickly.
I don’t know much about finance or taxes, so I already feel like a tax consultant could really help me. Additionally, as you said, it can help save so much time. Having someone to help with taxes can help you avoid future problems as well. I’ll be sure to look more into having a tax consultation.
Yes! Thank you for sharing this article. It is really a need to hire someone who has knowledge over everything about taxation so that you are confident that what you are paying is right.
People and also I like your blog that you publish on tax consultant. Your thoughts are very high and consist stability about tax consultant services. Thanks for your blog.
It’s attractive to read about some of the profit of choosing an accountant agency.
I also want to explain some key features and importance to hire an accountant agency.
An accountant agency will always endeavor to work with you to develop strategies to increase your profit ratings. Thorough analysis of your business will ensure that they overcome any risks or potential threats, whilst maximizing on your strengths and opportunities. They handle all of your matters with speed in order for you to get on with running the rest of your business.
I’m recently divorced, and in the past, my husband would take care of the taxes. Now that we’re separated, I’ll be on my own this year, so I’m thinking of hiring a tax consultant. I appreciate this article listing the benefits, like the chances of getting a higher claim from the IRS.
Thanks for pointing out how a tax consultant can save me up to 8 hours of work complaining and digging records when filing for my taxes. I would think that small business owners can really benefit from these types of services since they deal with a lot of transactions on a daily basis. That precious time and resources spent on filing your taxes can really be put to something more productive to your business.
I like how you mentioned that hiring a tax preparation service can help save you lots of time. I think this is so important because trying to balance home and work is difficult enough when it isn’t time to file your income taxes, so adding the element of tax filing can cause any family to stress. My husband and I are considering whether or not we ought to file our income taxes this coming year alone, or whether it would be worth it to hire a professional to help. We’ll have to look into a reliable tax preparation service in our area to help save us time and take care of the filing process for us, so we can balance our other responsibilities.
Very detailed article, Thanks a lot for sharing and after reading this, i do not need a reason to hire a tax consultant.
Saving time as you mentioned is important for my schedule right now so a tax service who can help me is great to have. If in case I did something wrong in my calculations in the past, an expert eye as you pointed out would help me correct my mistakes. I do agree that having an on-going advisor as you explained is great for the company so I’ll try to look for some consultants to get me started.
Hire a good tax professional just makes sense. Like you said, they have the knowledge to help you get every possible deduction. Tax returns are the bright spot of the year, so if hiring a professional can make them even brighter, I need to look into that.
I thought it was great how the article talked about being able to have more fun spending quality time with your family when you hire someone to prepare your taxes for you. My wife and I recently received all of the paperwork required to file our taxes, but neither of us is familiar with how to properly do it. It would be great if we could have a professional deal with all of the complicated paperwork so that we don’t have to worry about it.
It’s interesting to know that a tax consultant will provide you with another pair of eyes to look over things that you don’t want to miss. My husband’s business has been growing a lot this year, and I don’t think that we can do our taxes and his business as well. I will contact a tax consultant to help us not missing anything in our tax preparation.
Thank you for stating that if you hire a tax consultant, you will be able to know the right way to file your return. My husband and I have never had to prepare our taxes before, so we’ve been considering hiring a professional to help us. I will definitely keep all of your great tips and information in mind when hiring a tax consultant.
It’s nice that you mentioned how hiring a tax consulting expert is a good idea if you rather spend your quality time doing something you love or with your family. I was looking at some taxation tips yesterday and one tip talked about the perks of having a tax consultant. Having a consultant seems pretty useful so I’d like to try it out someday.