Tuesday, July 14, 2020

5 Reasons You Should Use a Tax Professional

Source https://pixabay.com/photos/income-tax-calculation-calculate-491626/

Millions of people prepare and file their own taxes each year. For simple return, this is usually perfectly fine. For others, however, mistakes or missed deductions can be costly. That is why, if you have experienced certain life events or made major financial decisions, it is best to seek the advice of a tax professional. 

1. You Started a New Business

Despite an economic downturn, some industries are thriving. If you chose to take advantage of that situation and opened a business, you will likely face a new and challenging tax preparation process at the end of the year. The sooner you start planning for that, the easier it will be. Take time to talk with a Denver tax prep professional who can help you navigate complex business returns and keep you abreast of changes in corporate tax law.  

2. You Tapped Into Retirement Savings

There are plenty of reasons to withdraw money from retirement accounts that have nothing to do with retirement itself. While that money may be subjected to fees and taxes, there are some exemptions that allow you to use your money without penalties. What you are responsible for will depend on your age, the type of account in question and the purpose of your withdrawal. 

3. You Had Foreign Investments

Earnings and losses on foreign investments are increasingly common, yet they are handled differently than their domestic counterparts. Unless you are well-versed in international finance rules and regulations, it makes sense to enlist a professional who is when you need to prepare for tax season. 

4. You Are Eligible for Social Security

If you have worked and paid into the Social Security system throughout your life, you are eligible to file for benefits starting at age 62. Social Security is taxable above a certain amount, so you will need to make plans for that bill at the end of the year. 

5. You Attended a College or University

There are several different deductions and tax credits for higher education. If you, your spouse or a dependant attended an accredited college or university, you may be eligible to lower your tax bill. In some cases, the right credit might be able to reduce your liability to zero. 

Not everyone needs the services of a tax professional. For many, however, it can mean the difference between owing a large sum of money to the IRS or getting a modest refund. If you have started a business, made certain investments or withdrawn money from your retirement accounts, it is best to seek help in planning for and preparing your returns. 

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