If you’re self-employed or own a small business, you may be inclined to hire a professional to file your taxes. But if your tax situation isn’t so complex, you may decide to tackle your upcoming return on your own.
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Let’s say the only income you have to report is wages as listed on your W-2 and a 1099 showing interest you earned in your savings account. If you’re planning to claim the standard deduction, then in that scenario, there may not be a need to hire a professional.
Even if you are itemizing on your taxes, you might still decide you’re capable of handling your return yourself. Besides, today’s tax software is sophisticated enough to point you in the proper direction, right? Well, maybe.
Mark Steber, Chief Tax Information Officer at Jackson Hewitt, cautions, “Not all software is the same.” So if you’re filing taxes solo, you’ll need to be careful about which program you use. And you’ll also need to do your own research on tax deductions and credits so you don’t miss out on any benefits you’re entitled to.
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Don’t deny yourself a tax break
Companies that make tax software have to pass certain IRS standards, explains Steber. But this doesn’t mean that every software program out there will work as well as the next. And also, you can’t assume that if you use tax-filing software, that you’ll automatically be prompted to claim all of the credits and deductions you’re eligible for.
As such, if you’re going to file a tax return on your own, you’ll need to do two things:
- Choose software from a company you’ve heard of, and one with a good reputation
- Do your own research on tax credits and deductions so you don’t lose out on money-saving opportunities
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Steber also says that if you’re in a position to itemize deductions on your tax return, it could pay to hire a professional, even if you’re confident in your ability to navigate the situation on your own. The U.S. tax code is extremely complex, and there may be nuances you aren’t aware of. But it’s a tax professional’s job to be aware of those lesser-known rules — and let you know if they apply to you.
Will hiring a tax professional cost more than filing your taxes solo? Of course. But you may be surprised at how reasonable some of the fees are. And the fee you pay might be negligible compared to the savings you end up walking away with.
Software is better than paper
While Steber does caution that some of the tax software you’ll find out there isn’t the best, and that you need to be careful when using tax software, filing your return electronically is still generally a much better bet than filing on paper. Not only might it lead to a quicker refund, but you’re at least less likely to make a math mistake that delays your return from being processed.
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Plus, when you file electronically, you don’t have to risk your tax return getting lost in the mail. And that alone should give you more peace of mind.
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