Hiring a Tax Expert is Worth It for Most People | Business

The tax code can look like a house that has had several additions. Some of them flow and have logic. Some of them are confusing and seem counterintuitive. And not everything was written at the same time, so it’s not always consistent.

The basic principle is that the money that is due to you, as a taxpayer, is subject to income tax and you have the right to deduct the expenses associated with receiving this money. These are the rules, but there are exceptions. Some of these exceptions appear to be related to public order. This labyrinth of rules and exceptions to the rules can be confusing for people who are not regularly exposed to it.

A misconception is that money received for work is not taxable. Most people who have self-employment income understand that checks, credit card payments, and funds received through online payment systems are taxable income. Failure to report income paid in cash is to cheat your taxes. It’s often harder for the IRS to find, but it’s still illegal, just as it’s a crime to shoplift even if you don’t get caught.

Interest charges on a mortgage or home improvement loan that were used to buy or improve your home are deductible. But not all mortgage interest is deductible. The tax code was changed a few years ago to limit the amount of a mortgage loan if interest is deducted and to eliminate the possibility of deducting part of the interest on a mortgage or home equity loan. if it was used for any purpose other than buying or improving a home. Interest on other consumer loans such as auto loans and credit cards is not deductible.

A major myth about taxes is that taxes are simple and that there is inexpensive software that you can use to do your own taxes. Some tax returns are straightforward and the cost of professional preparation is minimal. And the commodity tax packages available are generally quite accurate and user-friendly. But you don’t know what you don’t know. The technological adage “garbage in, garbage out” applies to tax software. You may take deductions to which you are not entitled or miss deductions to which you are entitled. Having a tax professional who is knowledgeable and supports their work is worth it for most people.

Tax professionals who work with the tax code regularly are more likely to know about rule changes than people who only file one tax return per year. Registered agents and CPAs must pass tests to earn these designations and must undergo regular continuing education to maintain their credentials. While you might be put off by the cost of getting professional advice on your tax matters and preparing your tax return, there is something that can be more expensive than paying for professional support: the cost of doing a tax return. error because you didn’t have Support.

Linda Leitz is a Certified Financial Planner and Registered Agent. She can be reached at [email protected]

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