When it comes to tax planning, there are good reasons not to go it alone.
When tax season arrives, it may be tempting to work on your own taxes, without the help of a tax professional. Whether you plan to file personal taxes, business taxes, or both, you might assume that you can handle tax planning and achieve the best possible outcome.
Perhaps you’ve always done your own taxes. Maybe you enjoy the tax planning process and like the idea of saving money with a DIY approach.
But, not so fast. Just because you can file your own taxes doesn’t mean you will save money.
What if doing your own tax planning was not only costing you money but forcing you to miss out on time savings and peace of mind, as well? The truth is—if you go it alone, you could be missing out on a wide range of benefits.
Let’s take a closer look at how professional tax planning can directly help you:
Maximize your Personal Tax Deductions
A tax deduction is an amount you can subtract from your total taxable income. This, in turn, will help to reduce the total amount of taxes you owe. Rules around tax deductions are commonly added and adjusted; it is important to keep up to speed with current tax laws and deduction rules.
For standard personal deductions, the recent Tax Cut and Jobs Act nearly doubled the amount an individual could claim. It continues to change, increasing the basic amount that individual taxpayers can deduct from their income.
Beyond this standard deduction, there are many other sources of individual tax deductions, including:
- investment losses
- medical and dental expenses exceeding 7.5% of adjusted gross income
- contributions to an Individual Retirement Account (IRA) (or another qualified retirement plan)
- contributions to a health savings account
- student loan interest (up to $2,500)
- expenses for those who are self-employed
- many more
Of course, everyone’s financial circumstances are unique. Making the most of your personal tax deductions takes a careful exploration of your lifestyle and overall financial picture. A tax planning professional is skilled in understanding tax laws and deduction limits. They can help you find and apply every deduction you may be qualified to receive.
Maximize Business Tax Deductions
Similarly, tax planning is critical for business owners, who want to maximize their eligible deductions and keep as much of their hard-earned profit as possible. If you have a growing business and have always done the taxes yourself, a tax planning expert can help you make the most of eligible deductions.
Some of the most common deductions for small business owners include:
- start-up costs
- vehicle expenses
- travel expenses
- legal and professional fees
- advertising and promotion expenses
- bad debt from unpaid invoices
- taxes (sales tax, local taxes, property taxes)
- many more
As with personal tax deductions, if you are used to doing your own taxes, you will likely understand most of the deductions offered. Working with a tax planning professional, however, will allow you to make the most of new deductions or annual changes that might apply to you.
Make the Most of Tax Credits
Unlike tax deductions, which reduce your total taxable income, a tax credit directly reduces—dollar for dollar—the amount you owe. There are three basic kinds of tax credits: refundable, non-refundable, and partially refundable.
Depending on where you live, your circumstances, and how you earn a living, you will have different tax credits available to you.
Examples of tax credits include:
- childcare costs
- adoption fees and expenses
- education costs
- dependent care expenses
- many more
Because tax credits are so helpful with directly reducing the amount of tax you owe, it is critical to maximize their use. Working with a tax planning professional will help you identify and use every possible credit.
If you’re used to doing your taxes—personal and/or business—you’ve likely made an error at some point that you’ve caught and had to fix. Usually, when an error is obvious, it forces you to go back to the beginning of your tax planning and start over, so you can identify where you used incorrect numbers. Once you’ve fixed all your errors, you can resubmit your file.
Of course, if you finish your taxes without an obvious error, you are less likely to go back and review (and double or triple-check) your numbers. This is when costly mistakes can easily happen. Simple errors in your tax forms can leave you blind—unknowingly paying more than you should.
Other common mistakes include missing or misused forms. If you fail to submit a required form to the IRS or submit the wrong one, you will likely need to resubmit your tax file altogether. This will result in delayed processing and extra paperwork.
One of the key benefits of working with a tax planning professional is the simplicity of the experience. When you work with a trusted professional, you can rest assured your taxes will be filed with the required forms and with everything filled out correctly. Given their expertise and familiarity with the process, you will likely save time and money with a professional on your side.
Peace of Mind
Naturally, one of the key benefits of working with a tax planning professional is the peace of mind you will gain. Beyond the accuracy and time savings that a tax expert can provide, you can trust they’ll know how to handle anomalies or potential issues as they arise. As tax rules and laws change, they are both up to speed and ready to help you maximize any gains.
In addition, there is great simplicity in handing over your documents to a tax planning expert, knowing they will do the work, double-check the numbers and submit on your behalf. Much like other professional services, tax experts deliver peace of mind by taking tasks and worries off your plate.
Reduced stress is a common reason many people turn to tax planning professionals. Knowing you have a team on your side, whether you need a straightforward tax return or help with something more complex— such as a tax audit, tax liens, delinquent taxes, tax relief, or an Offer in Compromise—having the right support can give you total peace of mind.
Of course, not every tax professional is equal. As you seek tax planning help, be sure to look for an experienced, professional team with a strong track record and exceptional reviews.
At Franskoviak Tax Solutions, our team of CPA’s and Enrolled Agents have helped literally thousands of clients with tax planning for more than 30 years. We take pride in handling the details of tax planning, simplifying the process for our clients while providing them with the best possible outcome. We are tax experts who not only file personal and business taxes but also help with IRS tax relief and tax problems such as IRS tax notifications, tax liens, delinquent taxes, and more.
Headquartered in Michigan, with new locations in St. Petersburg, Florida, Cincinnati, Ohio, and Indianapolis, Indiana, Franskoviak Tax Solutions provides comprehensive tax services with first-class expertise and a personalized, boutique-style approach.