Every US citizen living and working in the United States or
abroad must determine which federal income taxes he or she owes, if applicable.
The deadline to pay those taxes for yearly salary earners falls on April 15th
of each year; for those who pay quarterly taxes,
this date is generally the last day of the second quarter. Despite which
category you may find yourself in from year to year, every working person must
choose how they file their taxes before the April 15th deadline.
There are pros and cons to a variety of filing options which ultimately depend
on the type of employment status workers procure.
Once you have determined whether or not you are required to
file for federal income tax, you must figure out which filing status you
qualify for. Because some filing statuses can be more advantageous for some
individuals or families than others, it is important to determine the path that
best suits your personal and financial situation. Approaching a certified
public accountant (CPA) or taxpreparer is a common way to determine your tax situation before April 15th,
but a sizable portion of the American workforce continues to prepare and file
their federal taxes themselves.
CPA versus Tax Preparers
Even though CPAs and tax preparers may have significant
experience in completing and processing tax forms, there are differences
between each role. CPAs, for example, are required to undergo state-mandated
certification that make them experts in many areas outside of tax preparation
such as accounting matters or other financial services. While customers may
very well pay more for the services of a CPA than a tax preparer, the
additional cost generally covers the expertise needed to analyze and prepare
rather complex tax situations. If you find your tax situation is relatively straightforward
and simple, choosing a tax
preparer might be a more cost efficient method to file your federal income
tax. Another advantage of using these services is the protection that comes
with your taxes being filed by another business. In the event of a clear error
or miscalculation by a CPA or tax preparer office, the IRS will often hold them
accountable before penalizing the filing party.
Individual Filing
Individual or “self-filing” can be an option for those who
wish to save money on hiring a CPA or tax preparer and who might also have due
experience with the tax system. Those who understand how to file generally
choose this option using free forms and other documents found on the website of
the Internal Revenue Service. Online services also allow those to enter in
their employment information in a wizard that will generate the necessary tax
documentation needed to file both state and federal income taxes. These
step-by-step online wizards generally charge between $12 and $25 depending on
how complex one’s tax preparation is for the service. While these services may
be cost efficient and user-friendly, filers run the risk of incorrectly
inputting data or taking advantage of a deduction or strategy that could have
been otherwise been advised by a CPA office.
The complexity of your employment situation will often
dictate which option is best. Those who have changed jobs more than twice in a
year or who are independent contractors should probably consult the services of
a CPA, while those who have been employed with the same organization for a few
years and have a few standard deductions might simply go with a tax preparer or
online, self-filing option. Those who are required to file federal income tax should
nevertheless conduct their own research well before the tax deadline in order
to determine which option is the best for their financial situation.
No comments:
Post a Comment