Many people wonder if they need to have a professional handle their income tax return preparation. There are plenty of cases where a self-prepared return is fine. However, there are also several scenarios where you should hand the job to a pro.
Multiple Income Sources
In the modern economy, many strive to maintain multiple income sources. From an investment and financial stability standpoint, this is a good idea. It does come with some challenging tax implications, though. For example, you need to make sure that you carefully separate long-term and short-term capital gains properly. Likewise, you need to separate employment income from other sources. A professional can assist you with making sense of the web of applicable tax laws.
Money from foreign income sources creates two notable preparation issues. Foremost, you want to make sure that you can properly claim payment of overseas taxes against your U.S. bill. Secondly, you need to make sure to declare the income. Otherwise, the government might flag the income as questionable.
This is particularly a common issue with federal tax return preparation because the feds closely monitor overseas money transfers for unreported income and illegal activity. In some cases, improperly reported foreign income can trigger tax notices or even audits.
Big Financial Events
For many folks, tax preparation is a boring annual ritual that doesn't amount to much in any given year. When you have a year with a big financial event, though, you will find the work is a lot less boring. A professional can help you if you've experienced a financial windfall from an inheritance, major investments, the sale of a house, or winning the lottery.
Running a Business
Even if you believe you can handle the complexities of your company's income tax return preparation, you should call a professional. Also, it is best to avoid the temptation of having your bookkeeper or accountant fill out the return. Segregating financial roles within a business is critical. It discourages biased decision-making, particularly in claiming deductions. Likewise, an extra set of eyes on the return reduces the odds of a major mistake.
If your taxes are overdue, you will need to take several steps to address the situation. Foremost, you need to notify the government of the problem. You have to also file the normal return and some additional forms to pay penalties. If you wish to ask the government to waive the penalties for a good reason, that involves more paperwork.
Contact a local professional to learn more about income tax return preparation.