For most people around the world, January is the month where they get busy choosing what diet plans to take to lose the extra pounds they gained during the holidays. It’s a different event for us, American Citizens. The month of January means tax season has begun. Even though the idea of a possible tax refund is a great thing, tax return preparation is not an enjoyable task at all.
Federal income tax is a kind of tax collected by the United States Internal Revenue Services (IRS) from its citizens and residents, regardless of the states we live in. This tax is applied to all kinds of earnings, such as employment earnings or capital gains that make up the taxpayer’s taxable income.
Below are the top 5 reasons why people avoid preparing their own federal tax deductions.
1. They own a small business.
When I asked my friends on social media as to why they don’t do their own tax deductions, the topmost reason they gave is because they own a small business. According to them, the itemized deduction is very confusing and time-consuming. In addition, they want to make sure that the tax deductions are filed correctly to make sure that they will not end up owing money to the IRS or face a possible audit. Though hiring professional tax preparers does not guarantee that you will not be subject to an audit, their experience will guarantee that fewer errors will be made since they have the experienced with the tax filing process.
2. To make sure their taxes are filed correctly.
A lot of people do not completely feel comfortable filing their own federal tax deductions. Even though there are a lot of comprehensive tax software available these days for free, it still doesn’t give taxpayers accuracy and reliability. Some believe that if they hire a professional tax preparer to do the job for them, they can maximize the refund that they can get from the IRS. It also gives them the peace of mind from worrying that something might go wrong and that their tax returns might be subject to further review.
3. Federal tax deductions are too complex.
Itemize deductions, 1040 forms, tax withholding, and IRS. These are just a few big words that scare a lot of people on doing their own taxes. The way some media outlets and company advertisers have presented tax preparation to the public, just added to the perception that it is a complex thing to do.
According to USAToday.com, for the year 2016, 86%, nearly 132 million, of returns were filed with tax software. Though most of these are computer-prepared and e-file returns – almost 79 million -were completed by tax professionals.
4. Don’t want to deal with the IRS.
If you are single and don’t have that much property or assets, it is advisable for you to use available tax software to prepare your own federal tax deductions. However, this is still not the case for most Americans for the reason that they know it is still possible that questions may arise about the tax they have filed and the IRS might need to investigate and collect more information. While if their tax were done by a professional tax preparer, they have this peace of mind that everything has been done correctly and someone will back them up if issues arise.
5. Don’t have time to prepare and complete the task.
Preparing your own federal tax return can be overwhelming and time-consuming. According to the IRS, it will take an estimated total of 16 hours for an individual to complete the 1040 form. The 1040 form is the form that 69% of Americans use to file their taxes.
This still does not include gathering necessary documents, tax planning, and filling out and submitting the return. Aside from all of this, the duty of making sure that all you have submitted are accurate falls solely on your shoulders. That is why as much as they can afford, people will just hire tax professionals to file their tax returns.
Federals taxes collected by the government are used to fund a lot of things, such as building and maintaining infrastructures, improve sectors such as health, education, defense and a lot more. So whatever may be your reason for not filing your own federal tax deductions, just make sure that all the information you have provided is accurate. Just think of it this way, by filing your yearly taxes, you are contributing to the growth of your country making it a good place to live in.