Why Filing DIY Tax Returns Should Be Avoided
DIY or do-it-yourself activities are a great test of creativity and an excellent opportunity to save a little money. Doing things yourself can also be therapeutic or fun. However, as the DIY craze catches on, many believe just by watching a couple of YouTube instructional videos, all tasks can be completed swiftly and economically as a DIY, even the sometimes complicated task of filing tax returns for small businesses.
In reality, if you’re considering doing both your tax planning and filing on your own, you have a lot to consider before you’re in the clear. To give you an idea of how bad things could get, the expert at Wendy Klein CPA Professional Corporation has covered the consequences of attempting DIY tax-filing on your own and without complete knowledge of the job.
1. Mistakes are easy to make
Tax filing being the complex and evolving maze that it is, attempting to file your tax returns without in-depth knowledge and an up-to-date understanding of the process and norms leaves you vulnerable to mistakes that could have been easily avoided. For example, in 2020 alone, due to the COVID-19 pandemic, tax laws changed over twenty times, and sometimes varied guidance was being released almost daily, making tax filing more complicated than it needs to be. The other thing with tax returns is that you often only realize your error when it’s too late, and the IRS (Internal Revenue Service) has already called for an audit, and the situation cannot be reversed.
2. Mistakes lead to costly penalties
Taxes are already burdensome enough without adding liabilities that could arise from missteps in the filing process. While civil tax fraud can’t send you to jail, it can result in a penalty of seventy-five percent of the tax due, plus interest. Criminal tax penalties like tax evasion generally come with a five-year prison term and a fine of up to $100,000. Therefore, remember that the expenses resulting from tax filing mistakes are way higher than what you would have paid a professional to do it right the first time.
Do things right - Hire a professional
While you do not necessarily need a license to file tax returns unless you have significant knowledge of the internal revenue code and state and local tax codes, which are continually changing, DIY tax solutions should be avoided. Additionally, relying on yourself to file tax returns without messing-up requires you to be detail-oriented, understand personal and business financial management, and be somewhat computer savvy to work your way through the system.
To put it simply, choosing a competent CPA to handle your accounts and taxes brings a level of professional aptitude that you cannot afford to miss.
CPAs have vast experience and knowledge that enables them to recognize problematic areas and file essential information that clients generally overlook. A CPA also understands how to assist and knows the correct procedure to navigate tax issues successfully. Most importantly, tax professionals and CPAs advise clients to take specific steps or suggest courses of action that help their tax situation for years to come.
Another vital thing to remember when seeking expert tax or accounting services is their efforts can either make or break your finances. An inexperienced CPA though cheaper, could negatively impact the outcome of IRS audits and be detrimental to your overall financial situation.
The cost to employ an experienced CPA’s services usually depends upon the complexity of the job and the competencies of the practice in question. However, if budget is a primary concern when hiring a taxation specialist, it is advisable to shop around for quotes and find professional tax services that you can easily afford.
For a reliable Certified Public Accountant in Idaho and California, reach out to Wendy Klein CPA Professional Corporation. Wendy comes with more than thirty years of public accounting experience, offers an initial free consultation to learn about your business requirements, and promises reasonable fees that are agreed upon in advance and do not depend on income levels. From tax planning to any accounting needs you might have, her goal is to help you and your small business stay compliant and achieve your goals.