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Do-IT-Yourself Tax Preperation Software
You might be surprised at my recommendation, because the answer depends on your situation. Do-it-yourself software is a popular option, and the Turbo Tax® software has plenty of prompts to guide you through entering your tax information, though the average taxpayer may need to call the help line anyway. The second viable option is to use one of the national chains that open local offices everywhere during tax season. We have well-trained professional associates that have been with organizations like H&R Block for many years. If you luck into meeting one of these veteran preparers, your tax return should be properly prepared, even if you file a 1040 that includes self-employment or investment schedules. However, if you own an incorporated business, have rental properties or multiple investments, or there were any special circumstances in your income for the year, you should think twice before walking into an office where you could end up with a tax preparer that’s had only one training class.
There’s a difference between entering the numbers to crunch out a return, and planning out your affairs. A CPA will use your tax preparation as a cornerstone to focus on your entire financial picture. Tax planning, estate planning, business development strategies – these are the foundational building blocks of achieving your long-term goals. Your future could be at risk if one of these is left out of the construction process.
If you want a dedicated professional who really knows the business of taxes and finances, you need a CPA. We’re trained to understand your finances and to creatively apply the tax rules to benefit you. We look at where you are and where you want to be, and we recommend tax savings options, investment strategies, retirement and estate plans to help you reach your personal goals.
Whichever method you choose for completing your tax returns, the condition of your financial records makes a difference. The American Institute of Certified Public Accountants (AICPA) states that good recordkeeping makes tax preparation easier and reminds you of deductions you might otherwise overlook. Furthermore, “Back-up documentation may save you taxes, interest charges and penalties if the IRS ever questions your return.”
If you have to search through shoeboxes and drawers to find your documents for tax return preparation, you need to make the time to gain control of your records. It pays off in the long run. Having a filing system for your financial documents will not only help identify financial and tax-planning opportunities, but it will also help your family if you die or become incapacitated. This is especially true if you own a business.
A filing cabinet works best for most people, but an accordion file will do. The goal is to store everything in an organized fashion in one place. The basic categories of documents that should be saved are: tax documents (including prior years tax returns), banking records, investment reports, retirement plan information, insurance policies, and home records.
An incorporated business should use one or more filing cabinets to save the following documents: incorporation documents, prior years tax returns, Financial Statements, journal & general ledger, employee records and payroll reports, property and vehicle lease or purchase agreements, inventory records, bank and credit card statements, expense records, and copies of invoices issued and/or paid.
With these records in hand, you are ready for the completion of your tax returns, whether you use do-it-yourself software, a tax preparer, or a CPA.
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