One of the best decisions I ever made, was to entrust my tax processing to a professional. No, I am not talking about those colorful individuals from H&R Block. Surely, if you’re in a hurry, as an individual with uncomplicated financial status and in no need of real savings, you can go with these guys – or even buy one of the several commercial software solutions and just do it yourself.
On the other hand, if you’re looking for real attention about tax & business-related issues throughout the year, it’s worth locating and establishing a long-lasting relationship with a CPA – a Certified Public Accountant. Preferably, one that is aware of all new laws regarding the handling of “virtual” or intangible property, such as domains.
The first few times I did my taxes by myself. Back then I was married filing jointly, with kids, a house and a full time job. Over the course of several years, I am quite certain that I lost several thousand dollars due to being unaware of minimum deductions that apply by default: without a need for any real receipts. Did you know, for example that your car – once used to conduct business – has a depreciating value applied each year, including gas mileage? I didn’t know and neither did the software I used to do my taxes, after I gave up on the standard 1040 form done by “hand”. At one point, I missed out on $1,000 of deductions which I only discovered by accident a few months later; I was smart enough to apply for an amendment and I can only thank Google for that.
A CPA literally takes the burden of tax processing off your shoulders. Preferably, they run an office within close proximity, they have an active web site that you can manage your documents at and they offer support and consultations with you on a per request basis. Most important, they don’t charge for their services other than the annual processing fee.
Just tonight, I read on CNN that “tax season became a little more taxing this year, with the average person spending more than a day and more than $200 collecting, calculating and compiling those numbers for the tax man, according to a report based on Internal Revenue Service figures.”
Two hundred bucks is a lot of money to bear the burden of responsibility and the task of doing everything right, all by myself!
The first time I used my current CPA was a little over 3 years ago. At that time, I was recently divorced, had sold my home and moved to another job; all while using Turbo Tax, which had taken me through all the loops and automated whistles it offers. At the final page I was looking at a grim $1,275 of tax payable to the IRS. Not too thrilled, if you asked me.
My girlfriend of that time suggested that I should use the very same CPA her parents used for years for their taxes. Now, I take advice from women very seriously, especially the ones with pretty blue eyes. So – reluctantly – I contacted their office and provided all the information needed, hoping that they’d do a better job than Turbo Tax. That year, I had a return of $850 after my fees to the CPA were paid. How’s that compared to a potential loss of $1,275 to the Man?
Of course, one still needs to be on top of things and save receipts, document transactions and register purchases and sales – along with “bugging” the usual suspects, the parking companies for the 1099 forms each year and all other sources of income. I must say that both Parked.com and Sedo.com are religious in their sending of the forms and that gives me plenty of time to gather all the information and submit it to my CPA. Thanks guys, at least all the money you make off my traffic goes to good use.
A Certified Public Accountant can be located in your local Yellow Pages, or – preferably – can be referred to by other friends and relatives in your area. It’s an investment well worth the cost (in the $200 to $350 region per year). Did I mention the CPA’s tax processing charge is a business deduction as well?
This year’s April 15th tax deadline is already here; get a CPA for your taxes and file for a 6 month extension with the IRS. You won’t regret it.
Yep, for sure. I pay mine every month and he does a good job. Leave that part to a professional.