The world is full of do-it-yourself projects done by people who shouldn’t have done it themselves. Too late, they realize that they should have called someone to put up that ceiling fan, run that water line to the new fridge, and level out those sagging stairs. Fortunately, in most instances, these projects gone wrong can be corrected after the fact by a professional. Just don’t try installing that new gas appliance on your own.
There are many things we can do without professional consultation, depending on the amount of complexity involved. Our taxes are a good example. Ideally, the average person should be able to do their own taxes. But the tax code is one of the most convoluted legal codes the wold has ever known. Here is how you can know when it is best to get professional help:
When You Are doing Business
Everyone knows that New York doesn’t suffer fools lightly. If you want to do business in the big city, you should know a few fun facts from TaxBuzz:
- According to New York Times, it can cost over $289,000 for a one-year hot dog stand permit in Central Park
- It costs $1 million to get a license (medallion) to operate a taxicab
- According to Business Insider, If NYC were a country, it’s economy would be bigger than Switzerland’s
- The US Census reported that New York Cities median household income from 2009-2013 was $58,003
New York takes small business seriously. There is a good chance it is taken equally as serious in your neck of the woods. Treat your business finances lightly, and NewYork will leave you in tatters.
Whether you need a simple tax preparer or full service accountant, online services can help you narrow down the options, and find the best fit for you. Regardless of how you find your pro, when you are doing business, you need professional help with your taxes.
When You Are at High Risk of Being Audited
There is a creepy truth about the IRS of which you need to be aware: If you have a lot of money, they are keeping a close eye on you. The more you have, the closer they are watching. Make over 5 million, and your chances are better than 1 in 5 of being audited. Hit the 10 million mark, and you approach 1 in 3.
If you have been audited in the past, you stand an excellent chance of being audited again. Even if they didn’t find anything from your last audit, they don’t think their wrong. They’re not sorry. And they are most likely going to do it again.
Also, if you have made a costly mistake in the past, expect to be audited in the future. Initially, the IRS has to take your word for a lot of what you put on the forms. But they can take a closer look at any time thereafter. If they discover an error, particularly one in your favor, they will reverse your temporary good fortune, and make certain it doesn’t happen again. When it comes to such errors, the IRS has no sense of humor. If you are in the audit high-risk category, you need a pro.
When Filling out Your Taxes Is Not EZ
For some people, math is hard. Filling out forms can be tedious. But if you work at a single job, have had no major life changes in the last year or two, and are generally competent in finding information on one form and plugging it in on another, you can do an EZ filing.
If, however, you have a shoebox of receipts, are convinced you can write off that Macbook Pro, or have had a major life change such as marriage, divorce, kids, back to school, etc…, then you shouldn’t take any chances. Get professional help.
Doing your taxes may not be rocket science. But I am willing to wager that even rocket scientists routinely get professional help with their taxes.
