Many people dread tax season, and for good reason. Being hit with an unexpected bill can be challenging, especially for those who are already struggling financially. You might think that a DIY approach is a great way to cut costs, but be careful––an error can have you paying through the roof. Hiring a tax professional, while more costly upfront, can ultimately help you save money. In this blog, we’ll explain how. 

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Navigating the Intricacies of Tax Law

If someone were to ask us whether or not we understood tax law inside out, not many of us could confidently answer yes. A recent poll by the Tax Foundation found that tax literacy was low among US taxpayers. For example, when asked if receiving a large refund was a good thing, 52% of those surveyed agreed or were unsure. 

A tax preparer can walk you through your taxes and help you understand exactly how the laws apply to your unique situation. They can remove the guesswork from the equation and ensure you know why you’re receiving a refund or, conversely, why you owe.

Maximizing Deductions and Credits

Taxpayers often miss out on valuable deductions simply because they are not aware of them. A tax professional can spot opportunities that you might have missed. Here are a few of the most common deductions and credits that a professional can help you maximize.

Charitable Contributions

Most people know about charitable deductions, but they aren’t quite sure how to leverage them fully. Your tax pro can help you identify contributions you’ve made throughout the year––and not just the big, obvious ones either. Even thrift store donations can help you save on your taxes, something you might overlook without professional guidance. 

Home Improvement Credits

Upgrading your home isn’t just good for the environment, it can be good for your wallet come tax season. Making energy-efficient improvements to your property is a great way to save on costs. A tax professional can help you determine which upgrades may qualify for a tax break. 

Education Expenses

Education expenses, from tuition and fees to textbooks, can really add up. Thankfully, you can claim these on your taxes to save money. There are two big tax opportunities that students can watch out for and that a tax professional can help you claim. The first, The American Opportunity Tax Credit, can be claimed for up to $2,500. The other, The Lifetime Learning Credit, offers a maximum annual credit of $2,000. 

Time and Cost Efficiency

The time investment required to complete a tax return can be substantial. For many people, the hours spent undertaking forms, regulations, and potential strategies simply aren’t worth it. By hiring a professional, you can save time. What’s more, while there is an upfront cost to working with an expert, this can be offset by the increased savings on your tax bill. 

Avoiding Costly Mistakes with a Tax Professional

It’s no secret that tax mistakes can end up costing you dearly. In fact, if you are found to owe more than you pay, you can receive a penalty ranging from 20-40% on top of the existing amount. Tax professionals are human too, and while they may make mistakes, it is much less likely, and they typically cover the costs of whatever errors do occur. Here’s what to look for to ensure you’re protected in case your expert makes a mistake.

Tax Professionals Have Years of Experience

It’s best to go with a seasoned pro if you can. A tax professional with years of experience handling complex tax situations such as small business taxes and real estate investments is more likely to provide quality service. 

A Tax Professional’s Certification and Credentials

Make sure the person you’re working with has the right credentials. Look for qualifications such as Certified Public Accountant (CPA) and Enrolled Agent (EA). These designations indicate that the professional has undergone rigorous training and adheres to ethical standards. 

Professional Liability Insurance

Professional liability insurance also referred to as errors and omissions insurance, is essential for any true tax professional. It protects both the taxpayer and the expert in case of errors, omissions, or negligence during the tax preparation process. Basically, it ensures that any financial loss due to mistakes will be compensated. 

Year-Round Support and Audit Assistance

Your tax professional will be available to assist you year-round with whatever tax-related questions you might have. This is an extremely beneficial, yet overlooked advantage of working with an expert. Smart decisions made throughout the year can save you on your taxes, and a professional can help ensure you’re on track to minimizing payments and maximizing deductions.

Enjoy Peace of Mind With a Tax Professional

There’s no way around it––taxes are a pain. Understanding laws and finding deductions can be difficult, but tax pros help make the process easier. The right expert can offer tailored advice that DIY tax software cannot match. For that reason, enlisting a tax professional may just be one of the wisest investments you can make.

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