January 2022 - Georgen Scarborough Associates

Tax season has officially begun. And, after the past two years, the stress of filing tax returns and gathering documents is one that many people don’t want to deal with. Here are 10 reasons why you should be using the services of a tax professional this year:

Ten Reasons to Use a Tax Professional

Accuracy

The tax code can be complicated. Plus, any errors made when filing your return can be costly; legally and financially. This is why we pay tax professionals. Tax professionals keep you up-to-date with the tax code and have the necessary expertise to ensure accuracy in your tax returns.

Can keep you updated

The tax professional can update you on any IRS tax changes or tax law changes.

You may get a higher return

A tax professional can get you the highest return possible by ensuring you don’t accidentally miss any deductions.

Saves you time

Normally, it takes between 8 and 10 hours to compile a complete tax return. If you have a busy schedule, a tax professional is a great resource to free up this valuable time. Time is money after all.

Expert Advice

Tax professionals can answer any questions you may have and help you make smarter decisions to ensure maximum tax savings and returns.

Saves you money

If your tax preparer finds just one deduction you may have missed, it could easily cover their fee. Not to mention, the more deductions they help you find, the higher your return will be. They can also recommend ways for you to save on your taxes and increase your returns.

Reduced risk of an audit

You lower your risk of an audit when you use tax preparation services. Plus, if you are audited or the IRS starts asking you questions, the preparer will know exactly how to answer the questions and deal with the IRS.

Lowered Stress Levels

You no longer have to worry about filing the return yourself. Sometimes just knowing that you have professional assistance can reduce your stress levels.

Human contact

You get a personal touch from using a tax professional that tax software cannot provide. Plus, no matter how advanced the software is, it cannot represent you in an audit.

Current and future peace of mind

Tax professionals can equip you with the tools and knowledge to ensure that your current and future tax seasons go off without a hitch. They provide you with the best strategies to ensure you make smart tax-saving decisions.

For expert, professional assistance with your 2022 tax returns, contact Georgen Scarborough Associates, PC, today.

In today’s economic climate, saving to secure your financial future is essential. Contributing to a retirement plan is a tax-efficient, tangible goal that will help ensure that you can live comfortably in your golden years. This blog will cover the tax benefits you can achieve from contributing to a 401(k).

Tax Benefits of a 401(k)

The 401(k) came about somewhat accidentally. Congress passed the Revenue Act of 1978 (in that same year), which included a provision – Section 401(k). This provided employees a tax-free way to defer compensation from bonuses or stock options. Since the law went into effect on 1 January 1980, it has become one of the most common retirement plans in the United States—along with Individual Retirement Accounts (IRAs).

There are two versions of this employer-sponsored retirement plan. Both offer tax benefits. However, each is taxed differently:

The tax-deferred 401(k) – which has several variations
The Roth 401(k) – which was introduced in 2006

If an employee signs up for a 401(k), they agree to have a portion of each paycheck paid into an investment account. The person’s employer can then match the employee’s contribution in part or in full.

The tax-deferred 401(k)

A traditional tax-deferred 401(k) plan has the following key tax benefits:

You could pay less income tax. Because your “pre-tax” dollars make up your contributions, you will be lowering the amount of income you need to pay taxes on.
Contributions and earnings are tax-free until withdrawal. No taxes are due on the monthly contributions or the earnings your savings accrue. You are only taxed when you withdraw the money (usually in retirement)

The Roth 401(k)

A Roth 401(k) has the following key benefits:

No taxes are due when you withdraw. Unlike a traditional 401(k), contributions to a Roth 401(k) are deducted from an employee’s after-tax income. After paying your income taxes, you can deduct your pension. No additional taxes are due on your contributions or earnings when you withdraw the money in your retirement.
Taxpayers have the option of funding both a Roth 401(k) and a tax-deferred 401(k).

With the Saver’s Credit, formally called the Retirement Savings Contributions Credit, your contributions to a qualified 401(k) could lower your tax bill more depending on your income and filing status.

Georgen Scarborough Associates, PC, is an organization of certified public accountants that can provide tax preparation for individuals, families, estates, and trusts. For assistance with your taxes, contact us today at (703) 319-3990 or email us at kathy@gsacpa.com to learn more about what we can do for you.

Monthly Archives: January 2022

Top 10 Reasons to Hire a Tax Professional