Making your way through paper tax forms is a headache under the best of circumstances. But it also means there is no system in place to make sure you're getting all of the deductions and credits you deserve. While the IRS can make corrections and has systems in place to pick up on likely errors, there is no guarantee that those systems will help get you any returns or corrections that are in your favor. We've put together 3 questions to ask a tax preparer before you file so that you can maximize your tax return.
Online tax programs minimize a lot of those concerns. With increasingly smart interfaces that remember your information and can guess at the most relevant deductions, the chances of missing common, helpful regulations are reduced. But they can't truly customize to your life and income. Particular circumstances, unusual side jobs, and retirement strategies can all add up to missed opportunities. Reading through online strategies and tips can help, and asking a tax expert questions can help even more.
How can asking a CPA questions help with your taxes?
The traditional structure of most people's taxes is changing. Instead of involving a couple of W-2s and reporting investment income, there are a lot more components. A growing number of Americans have side jobs or freelance in the gig economy, which means handling 1099-MISC forms or not even getting a record of your income from different sources. If you receive health insurance through the Marketplace, you have to report the associated information from a Form 1095-A. As your sources of income and expenses throughout the year become more complex, your questions and your tax forms do, too.
How to limit the risk of an audit for contract work?
It's not just taxes that can be frustrating. It's also the risk of an audit that makes filling out the paperwork and double-checking the math so stressful. When you're self-employed or do freelance work on the weekends, that opens a new layer of complication. It's essential that you keep simple, consistent records documenting your invoices, income, and profit. There are a lot of programs available online that can track open invoices or monitor sales, but you have to maintain a system for specific tax purposes. A CPA can advise you on the best record-keeping practices so you have all the information you need each quarter.
Tax professionals can also help you clear up your expenses. The IRS tends to be more wary of home office and driving deductions. Not making regular profits can also get your job reclassified as a hobby, which makes a lot of beneficial tax rules inaccessible to you. Make sure you have someone you can ask so the details are all done correctly.
What's the right strategy?
Usually, married couples should file their tax returns together but that's not always the case. Sometimes it's beneficial for you to contribute to a TIRA for the previous year, but sometimes you don't receive many benefits from that strategy. Whether it's on a narrow spectrum of finding the right strategies in specific key areas or you want advice on larger-scale strategies (such as itemizing), a tax professional can give you conclusive answers without you having to do hours of work.
How should you characterize different investments?
More and more people are investing in real estate. Whether it's taking on a renter in an unused room, renting out a second house altogether, or making improvements to your home for the express purpose of selling the property, it's hard to know how it should figure into your taxes. A CPA knows the particulars of capital assets, real estate investment rules, and eligible expenses to make sure you get the most profit out of your investments without paying too much in taxes.
No matter what tax questions you have, go to Chandler & Knowles CPAs. We can get you the answers you need long before tax day arrives.