‘Tis the season — to nearly rip your hair out with the stress of doing your taxes, we mean.
‘Tis the season — to nearly rip your hair out with the stress of doing your taxes, we mean. Tax Day is looming (Tuesday, April 18, in case you needed a gentle nudge), and that means the pressure to file is starting to hit harder.
In order to save you from some of that unnecessary anxiety, we tracked down a tax guy who would give us the dirty deets on filing. Hint: Hiring someone isn’t always the way to go.
Here’s how one New York-based CPA says you can make tax season easier and score back some extra cash.
Yes, the storefront tax-prep franchises do employ some certified public accountants, but those CPAs are typically reserved for their well-off clients (as in, probably not you). That means you could be stuck with a tax-season temp who's been trained but doesn't have an accounting degree and might miss valuable deductions you're entitled to.
If you're a regular guy with a regular job and straightforward finances, TurboTax is a useful tool. Some CPAs have clients who use the program and then bring in their 1040 for a glance-over. You might not know that the IRS now provides tax-prep services for free. Go to irs.gov/freefile
Well, up to $75 a day. Most people don't report an expense if they have no receipt for it. But good records can mean less tax owed, and that's free money. So just keep a journal: Write the date, the amount, the purchase, and the reason for the purchase. If the IRS comes calling, trot out your notes to prove that everything matches.
Many people think charity dollars aren't worth reporting. False: They can bring down your taxable income enough to net you a nice break. Donate cash, old clothes, a car, whatever. Did you do charity work that involved travel? Your mileage is deductible. But make sure it's an IRS-approved charity.
If you overlooked a freelance gig or forgot to report your blackjack winnings from that weekend in Vegas, you'll need to come clean—the onus is on you to provide accurate data. That said, the IRS will probably cut you a break. But there will be extra red tape, and that's where the expertise of a CPA will prove invaluable. He or she can take it from there (and send you another bill afterward).
Messed up the math? The Feds aren't going to lock you up. They might charge you the tax owed plus interest. If it's your first transgression, they're likely to waive the penalty if you ask nicely. Now, if you've committed fraud, all bets are off: Time to lawyer up.
A tax professional's job is to determine which expenses can legitimately be claimed to give you a lower taxable income. But nobody's perfect—all CPAs make mistakes. If it's an error on the part of the preparer, then he or she is responsible and will clean up the mess with the IRS for you.
Say you're called in for an inquiry or audit. The worst thing you can do is go in without good representation. A professional can help you recognize where the problem lies and come up with a plan so you don't end up losing more money than you have to. You need someone who has experience dealing with the IRS or your state revenue department.