Tax Preparation

Preparing your own income tax return can be a daunting task. Current tax laws are so complicated that filing a relatively simple return can be incredibly time consuming and very confusing. And when you consider the fact that state tax laws and federal tax legislation are constantly changing, it makes the matter even more difficult. What worked fine on your tax form last year may get you in trouble with the IRS and cost you a bundle today. For that reason, it makes sense to use the services of a professional tax preparer. According to a study done by the US Government, 77% of all taxpayers believe they benefit greatly by using the services of a professional tax preparation firm.

The fact is, it is very easy to miss deductions and tax credits to which you are entitled. And those computer software tax programs are only as good as the information you enter. Neglecting to enter just one piece of relevant information can wind up costing you a bundle in additional taxes. For that reason, there’s no substitute for using the services of an experienced tax professional who does that sort of work everyday.

What Is Your Time Worth?

Consider the following example (Please note that even though the examples below are hypothetical, events like this are happening every year):

John Doe spends an entire weekend doing his own taxes. He has always done his own taxes, so he is familiar with the process. It involves:

  • Gathering papers
  • Organizing w-2s, 1099s, and related documents
  • Separating and categorizing reciepts
  • Finding purchase and sale tranaction reports for capital gains and losses for the year
  • Doing the math to calculate gains and losses
  • Reading the 1040 instructions
  • Filling out the required forms in pencil
  • Checking the math
  • Carefully proofreading all forms for errors
  • Copying the information onto the forms he will mail to the IRS
  • Signing the forms and putting them in the mail

At the end of this 11 hour ordeal, John breathes a sigh of relief. He is happy to see that he is getting an $800 refund this year. He prepares the forms to mail out in the morning.

On the other hand, Mary Smith has her tax returns prepared by a local CPA firm. Because she has used the same tax return preparation service for many years, she knows which documents they need, so she keeps them all in a separate file folder. Mary decides to do her taxes bright and early on Saturday morning. It involves:

  • Gathering tax documents and reciepts
  • Gathering w-2s, 1099s, and related documents
  • Finding purchase and sale tranaction reports for capital gains and losses for the year
  • Placing all of this information into an envelope to mail to her CPA.

In total , it took Mary about an hour to get everything done. She saved about 10 hours by having her taxes done professionally. In two weeks, she recieved her completed IRS 1040 forms from her tax accountant firm. She is happy to see that she is getting a $2,700 refund this year. She signs the forms as indicated, puts them into the envelope provided by the tax preparer and mails it out in the morning.

(Although the examples above are hypothetical, events like this are happening every year.) If the situation above sounds familiar, let me ask you, how much is your time worth?

 What About The Cost?

In almost every case, having your taxes prepared professionally by a firm like McNulty CPA Services, will almost always provide you with a larger refund or require you to pay less in taxes (when compared to preparing your own tax forms). In addition, having your individual tax return done professionally usually costs less than $300. Of course, if your tax situation is complex, it could cost you more. But the advantages in time, frustration, and tax refund (or tax liabilty) far out weigh the value of a few hundred dollars.

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