Posted by Dennis Jao

Why Do You Need a Tax Professional?

Why Do You Need a Tax Professional?

Software programs and friends with minimal tax law knowledge will constantly try to convince you that filing your taxes is easy and simple.  If you work one job, don’t own a home, are single with no kids and your only income is your one place of employment, this may be true.  But for the average American, filing your income taxes is anything but simple, and having a professional who will take the time to truly advise you could earn you hundreds or thousands of dollars more in your refund, or save you money for taxes owed. In Brea, CA and the surrounding areas, Dennis Jao specializes in helping people manage their taxes, and can advise you on the best ways to be responsible with your tax money.

    A tax professional is responsible for advising you on your individual situation.  Where many software systems will ask you questions about your life, they don’t have the ability to follow up with further questions the way a tax professional can.   The California State and Federal tax laws, deduction guidelines and credits change every year.  Part of a tax professional’s job is to stay current on all developments in tax law, and find out how they might apply to you.

    Even though a professional is always recommended, there are certain situations that require additional service because they are more complicated.  For instance, if you own a home, you are entitled to major deductions which you may not be aware of.  A tax professional will take into consideration all of the usual deductions, such as your property taxes and mortgage interest, but they will also be able to follow up with interpersonal communication to determine whether you may qualify for other deductions or credits.  If you’ve installed a pool for medical reasons, your preparer will know what you can deduct from that.  If you have installed new windows, you may qualify for a credit.  The professional is able to make sure you receive the benefits you qualify for.

    If you sold a home, you could be subject to capital gains tax.  Your professional can help you determine how much you will owe, and can even see if you qualify for the credits and deductions that will eliminate or lower the capital gain income, therefore reducing the tax owed.  Consulting a tax professional before you sell your home to check to see if you have the ideal timing to receive certain credits or deductions can even save you tens of thousands of dollars.

Having children can also mean complications in filing, but it can mean large credits and deductions.  Because of the amount of credits and deductions available, the regulations for claiming children and receiving child credits are continuously changing by the year, and have many stipulations attached to them.  If you are separated or divorced, you could be in one of the most complicated filing situations one could come across, especially if there are children involved.  Custodial questions are a common mistaken or fraudulent issue, and tend to be investigated under the most innocent of circumstances.  Claiming Earned Income Credit or Head of Household status can result in the IRS withholding your refund, or taking a very large portion of it back. 

 Owning a small business also means that you could benefit from professional tax preparation.  Reporting your business finances should be treated carefully.  There are many expenses that you can deduct, but there are also requirements attached to the income you claim.  Knowing how to balance these can reduce the amount of tax you owe, especially if your business does not show a profit.   In addition to reducing your taxes, the IRS has specific qualifications for small businesses, and can decide that you do not fall into the small business category, meaning you could end up owing money even though you saw a loss. 

 Being an independent contractor means expenses are itemized in a very different manner.  Independent contractors typically work multiple positions throughout the year, and it is important to be advised as to available deductions so that you are not left owing more than you should to the IRS.  There are expenses that an independent contractor can deduct which are separate from other self-employment expenses.  Having someone available to ask the right questions can help you determine what you’ve spent and how it can change the results of your tax return.  

In addition to the many available deductions and numerous situations in which a tax professional can benefit you, they also provide a level of audit protection.  This means that they communicate with the IRS during audit investigations for you, and take responsibility for supplying supportive documentation to your claim.  If you receive a letter from the IRS requesting more information, your tax professional will already know what information you need and will be able to prepare you to send in proper documentation.

If it comes to the point where you owe the IRS money, your professional is available to advise you on payment options.  They can set up a payment plan for you, dispute balances, or negotiate a settlement with the Internal Revenue Service.  Hiring a professional when you owe money can help you determine what you actually owe, and the best way to pay it that will work within your budget and settle the matter as quickly and painlessly as possible.

 To file this year’s taxes properly and get the most out of your refund, click the BLUE link on this page to speak to a professional preparer, Dennis Jao.

Dennis Jao
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