The Limitations of DIY Tax Preparation And How They Can Get You Into Tax Trouble
The widespread availability of DIY tax preparation software has made Do-It-Yourself tax prep easier than ever before. These software packages are simple to use, with step-by-step instructions and built-in checklists that make mistakes less likely.
But mistakes do happen, and when they do, the IRS will be out to collect any back taxes you might owe plus penalties and interest.
Note, if you find yourself in tax trouble, or owe the IRS back taxes, we always recommend getting in touch with a Tax Resolution Specialist like our firm to negotiate with the IRS on your behalf. If you’d like to schedule a no-cost confidential tax relief consultation, contact us by calling 207-221-6603 or https://taxresolutionallies.com/contact/.
DIY tax prep softwares have their limitations. There are times when the DIY approach will not work, and professional tax preparation services are warranted. Here are 10 times when it pays to abandon your DIY ways and seek the help of a tax professional.
1. You hold foreign assets or investments in foreign banks.
The IRS is cracking down on foreign assets in a big way, and holding them puts a target on your back. You cannot afford to take a chance.
2. You lived and worked in multiple states.
The laws governing earned income in multiple states are incredibly complicated, and most tax prep software is not set up to address those complications.
3. You had a major change to your personal life.
A marriage, divorce or the birth of a child will change your life – and complicate your tax situation. Major life changes require major tax help, and that means hiring a pro.
4. You made serious mistakes on a past return or already owe back taxes.
A mistake on a previous return, especially one that resulted in a bigger tax bill, is reason enough to hire a pro. Taxpayers in such a situation could face a higher risk of an audit, and they will be happy to have a pro in their corner.
5. You received a large inheritance.
If you inherited real estate, stocks or other property, your taxes may be too complicated to tackle on your own. A pro can help you sort things out, so you do not pay more than you should.
6. You won the lottery.
Congratulations! You probably owe a large amount in taxes. If the odds smiled on you last year, you will need serious help with your taxes.
7. You bought your first home.
Buying a home entitles you to tax breaks, including some that are quite obscure. A professional can help you ferret out those deductions, possibly netting you a lower tax bill.
8. You sold your home.
The sale of a home is a complicated matter, one that requires professional help and guidance. From determining the true cost basis to getting credit for realtor fees and past improvements, a professional tax professional can help you navigate these tricky waters.
9. You suffered the death of a spouse.
The death of a spouse is a tragedy, one that will complicate your life and your taxes. If you suffered the death of a spouse, you have enough to deal with, so give yourself a break and hire a professional tax preparer.
10. You started a business.
Once your business is up and running, you may be able to do your taxes, but for year one; professional help is warranted. A professional tax preparer can help with everything from business structure to identifying unusual but valuable deductions.
There is no doubt that tax preparation has gotten a lot easier in recent years. Thanks to technology many taxpayers can now complete their own tax returns.
Even so, there are times when the DIY approach is not the best one. If you find yourself in an unusual tax situation, it is time to get professional help, and doing so could be the best approach.
Have years of unfiled returns?
Our firm specializes in helping people with IRS problems. If you have years of unfiled tax returns, definitely don’t use a software and attempt to file on your own. Reach out to our firm and we’ll schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem. Contact us at 207-221-6603 or https://taxresolutionallies.com/contact/.