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Taxes are quite complicated and should be done properly to avoid consequences. While you are able to file taxes yourself and save money, it is recommended to use tax professionals who are trained to file taxes properly.
If you make a mistake when filing taxes, you may face consequences such as late fees, interest, collections, and legal action. If you file your taxes incorrectly, you may be liable to the IRS for anywhere from 3-10 years.
Since there are many affordable online tax services, you should avoid filing yourself and the risk of making mistakes. By using a professional service, you can save money in the long run because they are trained to look for deductions and ways to save you money that you may not have thought of.
Here is why not to do taxes yourself and use professional tax services:
Their experts: Tax service businesses come equipped with years of experience and a thorough understanding of current tax laws. Unlike most of us, tax professionals keep up with all the laws and look for any changes that might have been issued.
They’re not only tax experts, but they also have a good understanding of which deductions are allowed for many employees and business owners. You might be introduced to a deduction you were not aware of, which could save you thousands on your tax bill.
Risk Elimination: No matter who does your taxes there is always the risk of errors happening. But there is for sure less risk if a tax professional that has done it hundreds of times handles your tax filing. Eliminating the risk of errors can help you avoid penalties such as late fees, interest, collection, and legal action that can be taken against you.
Saves time: Unless you have all the time in the world to figure out the tax process and how to fill out of the forms, tax services can help you save a lot of time by doing the work for you.
Tax forms are black-and-white pages with a ton of confusing writing. This could be a huge challenge to someone who doesn’t know what they are looking for to file their taxes. Filing taxes with a professional can help you save a ton of time and frustration with figuring out the form.
This will also protect you from filing the form wrong and intentionally raising a red flag with the IRS.
Peace of mind: If you are a law-obeying individual and want to make sure that you don’t do anything wrong that can get you into trouble. Tax services is a smart decision for you because when you file with an expert you will educate on the steps to take to make sure you pay your bill on time or get the taxes filled out correctly.
This will be your peace of mind knowing that everything has been done correctly.
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The cost of taxes that you are required to pay can vary on factors such as income, location, and how your file. If you’re a business owner you will have different taxes than an individual will. Taxes can be complicated and should be handled with professional help in making sure that they are done correctly and help you maximize the proper deduction. When filing taxes you’re depending on your situation you might be paying Federal Income Tax, State Income tax, Social Security & Medicare Tax, Self Employment Tax, and Capital Gains Tax.
Federal Income Tax: This tax is on the individual or business income that is earned throughout the year and paid to the federal government.
This tax fluctuates depending on the individual’s income and can range anywhere from 10%, 12%, @4%, 32%, 35%, and all the way up to 37%. This tax is designed to cover expenses of the government such as national defense, healthcare, social security, and other government programs. It’s enforced by the IRS which will make sure when you report your income it enforces and collects your taxes.
It is good to understand that Federal Income Tax is complicated and can have many factors that determine your tax bracket and should always tax a tax expert to help you.
State Income Tax: This can fluctuate by each individual state and by the income that you have. Each state is allowed to set its own rules of what it will charge. If you live in a state that has state tax you are required to file those taxes including the federal tax.
Each state has different rules to determine if you are considered a resident and are subject to taxes. State tax will generally charge taxes on the same things as federal taxes such as income, tips, and investments.
The percentage you are required to pay will vary on your income and the state laws. To find out more be sure to talk to a sales professional to determine your amount.
Social Security & Medicare Taxes: These are taxes that are imposed by the government and help fund social security and Medicare programs. These programs are designed to provide financial assistance and health care to individuals with lower incomes.
Social security tax will vary depending on income and is adjusted every year and if your income is high you can be exempt from it. The same as the social security tax Medicare tax is calculated by the individual’s income and is used to cover the medical cost in the country.
Capital gains tax: This will be the tax that is charged from profits you earned from things such as stocks, bonds, real estate, and any other investments that you might have had. The amount that you will pay for your capital gains tax will be decided by if the asset is short-term or long-term.
Short gains are taxed at a higher percentage while long-term gains are usually taxed at a lower percentage. You can pay anywhere from 0%-37% on capital gains tax depending on factors such as income, tax bracket, type of asset sold, and the time you owned the item.
Capital gains taxes could be complicated and you should always seek a tax expert to help you minimize your capital gains tax.
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Tax software is a program designed to help the average employee, business owner, or organization file their taxes. Online tax software is a cost-effective way to file taxes by providing automatic software to calculate taxes.
These software programs are designed to look for deductions and credits to lower your tax bill. Many tax software programs are easy to use and can be accessed online without downloading anything. Tax software asks users questions about income, expenses, and other relevant information.
This software is designed like an interview to gather all the necessary information to file taxes properly and help claim any deductions. After answering all questions, the software automatically scans answers to identify any inconsistencies, helping to avoid filing taxes incorrectly and enabling the submission of taxes.
Some pros to using tax software can be time-saving, accuracy in filing could be cost-effectiveness, and you’re ability to claim deductions you might not have thought about. But on the other hand, some cons could be limited support, complicated filing could get it confused, and software issues or bugs.
Before choosing if you would like to use online tax software be sure to consider your situation and see what step would work best for you.
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This is a type of service that help individuals and companies file their annual tax returns to the government. Usually, they charge a fee for their service but offer the convenience of doing the work for you accurately.
There are many tax filing services and costs can vary significantly from them and by the service they provide for you. But the average cost is around $150 for a professional service but there are options out there for cheap that might offer fewer features or help.
It's an unfortunate situation but it happens to many people. If you're not able to pay your taxes the IRS offers payment plans or your ability to apply for loans to cover the cost and even use a credit card to pay for it.
Owing taxes does not eliminate you from getting loans, but it can play effect your approval rate because it can be added to your credit accounts as debt.
Yes you are able to pay for your taxes using a credit card or debit card to learn more you can visit the IRS website and it will give you the options. Although it's possible to pay with a card there are fees associated with that process so it might not be cost-effective.
Taxes are usually due on April 15 every year, but it does sometimes get extended if the date falls on the weekend. If you need extensions you can request them using tax software and if it's approved you can have as much as October of next year.
If you late on your taxes without an extension IRS is allowed to charge you a penalty which is 5% for each month that you are late and a maximum of 25% penalty.
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