Filing taxes is an annual requirement that individuals and businesses alike must fulfill. While some taxpayers prefer tax filing services to handle their taxes, others opt to do their own taxes. However, doing your own taxes can come with its fair share of risks, which could lead to costly consequences down the road.
In this article, we will discuss the risks of doing your own taxes and why it may be beneficial to seek professional assistance.
Lack of Knowledge and Expertise
Tax laws and regulations are constantly changing, and it can be challenging to keep up with all the updates. Taxpayers who do not have the knowledge and expertise required to prepare their taxes may inadvertently miss deductions, credits, or other tax-saving opportunities. In addition, they may make errors or omissions that could result in underpayment or overpayment of taxes. Incorrect filings can trigger IRS audits, and taxpayers may face penalties and interest charges for underpayment.
Time and Effort
Taxpayers must devote significant time and effort to gather all the necessary documents, fill out the forms accurately, and file them correctly. This can be a time-consuming and frustrating process, especially for those who are not familiar with the tax laws and regulations. Moreover, if taxpayers make errors or omissions, they may have to spend additional time and effort to correct them, which can further delay the filing process.
Taxpayers who do their taxes without professional assistance may miss out on opportunities to minimize their tax liability. Professionals have the knowledge and expertise required to identify deductions, credits, and other tax-saving opportunities that taxpayers may not be aware of. For example, a professional may suggest charitable donations or tax-deferred investments that could significantly reduce a taxpayer’s tax liability. On the other hand, taxpayers may miss out on these opportunities, resulting in higher tax bills than necessary.
Taxpayers who do not have the knowledge and expertise required to prepare their taxes may inadvertently make errors or omissions. These mistakes could result in underpayment or overpayment of taxes. Inaccurate reporting could trigger IRS audits, which could result in penalties, interest charges, or legal action. So, if you file your taxes without proper tax planning, you must ensure that they accurately report all their income, deductions, and credits to avoid any potential issues.
Lack of Support
When you choose to file your tax on your own, you may not have access to professional support in case of questions or issues. Tax laws and regulations can be complex, and taxpayers may have difficulty understanding them. If taxpayers have questions or need assistance, they may not have access to professional support to address their concerns. In contrast, taxpayers who hire professionals to handle their taxes can get assistance and support throughout the filing process.
Increased Audit Risk
Taxpayers who do their taxes on their own may be at a higher risk of being audited by the IRS. The IRS uses a computerized system to review tax returns, and returns with errors or omissions are more likely to be flagged for audit. So, you may be more susceptible to making mistakes or omissions that could trigger an audit. In contrast, taxpayers who hire professionals for tax filing in Florence are less likely to make errors or omissions and are therefore less likely to be audited.
The Bottom Line
While some individuals prefer to do their own taxes, it comes with its fair share of risks. Lack of knowledge and expertise, time and effort, missed opportunities, inaccurate reporting, lack of support, and increased audit risk are some of the potential consequences of doing your own taxes.
Seeking professional assistance can help minimize these risks, ensure accurate reporting, and maximize tax-saving opportunities. In the end, it’s essential to weigh the potential cost savings of doing your own taxes against the potential risks and benefits of hiring a professional, like Schafer CPAS.