INCOME TAX
Individual Income Taxes
Most people must file a 1040 (or version) for each calendar year by April 15th of the following year or, with a proper extension, no later than October 15th of the following year. The different aspects of a person's or a family's income vary as much as the people themselves. There are a seemingly infinite number of forms that could apply
to a tax situation. Many people have less-complex returns that can be done
fairly easily by a person with some financial sense. The availability of
"do it yourself" tax preparation programs like Turbo Tax have encouraged many people to avoid paying a professional to do the job. The benefit is a lower cost to the taxpayer. To decide whether to employ a professional or not, each taxpayer must weigh several factors.
Will I be able to prepare a correct tax return?
How long will it take me? Is it worth the time and effort?
Some factors that some do-it-yourselfers may not be considering are whether they are getting the most tax benefit or whether they are taking benefits which they are not entitled to. A tax audit or re-assessment can be costly when penalties and interest are involved. You also may be losing the benefit of future tax planning advice that could improve your future returns. It is your decision after all, but consider that the average
tax return preparation fee runs from about $75 to $175 dollars, with more complex returns generally not more than $250 to $275. Weigh that cost against your potential added tax benefit or potential tax pitfall and decide if it is worth your time or not.
Business Income Taxes
Business income taxes vary based on the nature of
the business. Corporations are generally taxed on the 1120 or 1120S
returns. Partnerships are usually taxed on the 1165 form and non-profit
organizations typically us the 990 forms. Again, these are general
statements and can vary by situation. By and large, most small businesses
employ professionals to prepare their income tax returns. These returns
are completely different than individual tax returns and the "don't try this at
home" approach is advisable. Business owners would be well advised to
consult a professional before choosing their business structure.
Bookkeeping services are recommended for most small business for the added
benefit of lower tax preparation fees. The rate for tax preparation is
usually more than the rate for bookkeeping preparation.