The Hidden Costs of Doing Your Own Tax Return

By Peoples Tax | January 2, 2020

The first day of tax season will be here in a few weeks! With so many DIY tax software companies out there, it’s easy to think all will be fine preparing your own tax return. After all, the software prompts you from beginning to end. So, what do you have to lose? It takes you step-by-step.

In fact, a wrong answer or a skipped question could cost you quite a bit.  While the tax software asks questions to complete your tax return, the software is only as good as the information you put into it. When you misinterpret a question or key the wrong information into the program, it can have a dramatic effect on the outcome of the tax return. These seemingly small mistakes can lead to costly penalties and interest charges. It’s easy to choose the wrong filing status or claim a credit or deduction that you might not really be eligible to take.

Choosing your correct filing status is not always as simple as it may seem…

For example: John was married on December 30, 2019 and he plans to file as single. After all, he was only married for 2 days and was single all the rest of the year. Is he making the right choice?? NO, filing status is determined on the last day of the tax year and on December 31st, he was married. John must choose to file either as married filing joint or married filing separate. There are consequences to each of these choices and choosing the wrong filing status could cause John (and his new wife) to pay extra taxes and/or lose valuable tax credits and deductions.

The “Head of Household” filing status is another place for taxpayer confusion.

Many individuals think this is the correct choice for them because “I am the Head of my Household.”  Well, it’s not that simple. Unmarried individuals, or married individuals that can be “considered unmarried,” may choose this filing status if they provide more than one-half (1/2) the cost of a home for themselves and for a qualifying child or a qualifying relative.  What is “considered unmarried, a qualifying child, or qualifying relative?” Do you know the correct answer to these questions?  If not, you could make a costly mistake.

Not to mention, if you prepare your own tax return and end up with a refund that happens to be more than you really should receive, chances are you will have spent the money before the IRS notifies you of the error and requests the money back. And then there will likely be penalties and interest that go along with that, too. Then, you’re looking at a bill that you might not have had otherwise. In addition, the ever-changing tax laws make it hard for the average taxpayer to keep up with the credits and deductions they are entitled to take.

If you’re considering a tax pro this year, give Peoples Tax a try!

Our tax preparers stay up-to-date on all of the tax law changes. Many of our preparers also write and edit tax school curriculum and provide instructor support for our sister company, The Income Tax School, which is the national standard for tax preparer training. Plus, our service is backed by a Triple Guarantee of accuracy, assistance, and satisfaction. So, you can’t go wrong choosing Peoples Tax!

We can assist you in one of our 3 convenient tax offices located in the central Virginia area, or you can try our Virtual Tax ProSM service from anywhere!

Contact us today at 804-204-1040 or email us. We look forward to hearing from you.

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