Do you dread when tax season comes around? It could take you many hours and even days if you decide to prepare your taxes yourself, as it depends on how you file and what files you’re using.
According to the IRS, it can take about 13 hours for the average taxpayer to do their return, including record keeping, tax planning, and form submission.
You might want to save time and hire an accountant, but these services can be expensive and the time saved could be significant, so you might be able to point out discrepancies so you could get a refund, or in the worst-case scenario, you owe the IRS money.
Either way, you may want to know the role of an accountant regarding your taxes so you can determine if you could do it yourself or not.
Read on to find out what precisely an accountant does and ways you could make the process easier for yourself.
What Does An Accountant Do With Tax?
When filing your taxes, an accountant will help you fill out your tax forms correctly and advise you about future financial moves that can affect your taxes.
They will also file taxes with the appropriate documentation electronically so that you receive any refunds as quickly as possible.
If you’re audited, an accountant can help you here as well. They can handle the audit for you to ensure that you get through the process unscathed.
As tax season can be a stressful time in the accounting world, you can make this easier if you decide to use an accountant by ensuring you provide the correct documentation to avoid wasting time and paying penalty fees.
Considering that accountants earn on average $58,515, this passes the threshold of $12,550 a year if they are single, and it rises to $25,100 if married and filing jointly.
You could assume that an accountant will find filing their taxes a breeze seeing there are electronic ways of filing taxes that keep everything organized.
Certain accounting firms also offer discounts for their employees, making it much easier, but knowing that accounting doesn’t always have a direct link with taxation but is a legal requirement in matters of tax can give you some indication of its importance in practice.
What If I Do My Taxes Myself?
Most people probably go for this method because they may not see the need for an accountant, and they can save an hourly rate for filing federal or state tax returns of $180 and $174 for other tax services.
Over the last decade, there has been an increase in accounting software and services that can make your filing more simple and automated.
These services have also been extended to business owners to balance the books so you can keep an eye on your outgoings and expenses.
Alternatively, you can go to the IRS website, where you can electronically prepare and file your federal individual income tax return for free using tax preparation and filing software.
You can choose between guided tax preparation, where some tax preparation or filing is free and fillable forms available for any income level.
The only drawback with the fillable forms is that you don’t get any preparation guidance, and limited calculations are provided, so it’s a very do-it-yourself way of filing but can be useful for people with simple financial circumstances.
Do I Need An Accountant?
The only reason that most people pay for an accountant is because their taxes are complicated due to their general living circumstances.
If your tax situation hasn’t changed in the last year, you’re single, you don’t have children, you work for an employer, or you don’t own any property, you may not need an accountant.
It makes a lot of sense to hire one if you’re self-employed or own a business because they can prevent you from making costly mistakes and can help determine how much you should pay in quarterly estimated tax payments going forward, so you’re not faced with a big tax bill at filing time.
If you’ve happened to fail to file taxes in the past or you owe unpaid taxes to the IRS, a tax accountant can help you file several years’ worth of tax returns and will know about the programs offered by the IRS for people in this situation.
Some Tips For Filing Taxes
Below are some tips that can help you break down the process one step at a time, and who knows, you might avoid some pitfalls and take advantage of money-saving opportunities.
- Keep an eye on your income- If you’re employed, look out for your pay stub for the year-to-date income. Remember to include income from other sources like money you make if you have any investments, interest, or things you’ve sold.
- Save the correct paperwork throughout the year- You’ll want to keep receipts for things like work-related expenses and medical bills, student loans, or investments and keep records for at least three years.
- Keep a lookout for your income documents to arrive- You should receive forms about how much income you’ve earned from your employers and other income sources in January or February. You want to ensure you receive the correct forms as this could delay the process if incorrect.
So now you know what an accountant can do for you, hopefully the decision you make as any tax season approaches is easier for you, and you can rest easy as long as you file them as early as possible.
For a general outline, taxes for most are due around April time to pay any taxes owed but to file your return, you can request an extension that goes beyond the April deadline.
If you happen to owe a balance to the IRS, you may want to consider filing your taxes as soon as possible as you can file your taxes as early as mid-January, but you don’t have to pay until that April deadline.
The best tip here is to keep on top of any changes to your financial situation over the past year, and if you’re still unsure whether to hire an accountant is to speak to one.
Some accounting firms can look at your tax situation and offer their advice, but be aware that they may require a flat or hourly fee if your situation is complex and they have to take longer to look into it.