Top 10 Reasons to Hire a Tax Professional

Top 10 Reasons to Hire a Tax Professional

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.

Tax Laws That Can Save You Thousands

Tax regulations

Tax laws are continually changing, and it’s essential to be aware of all the new regulations, so you file your income taxes correctly and efficiently. By taking advantage of all new tax laws, you can potentially save thousands of dollars on your next tax return. Here are three of the recent income tax changes for the 2020 tax year that will affect many American taxpayers when they file their next return.

Recovery Rebate Credits 

The first round of stimulus payments ($1,200 single, $2,400 for couples), along with the second round ($600 per person) are tax free. These Recovery Rebate payments will not add to your 2020 taxable income. As these payments were technically advanced payments, you will have to calculate the amount you should have received. If you are owed more, you can get the difference back in the form of a refund, or a lower tax bill. Best of all, if you were overpaid, you will not need to repay the difference!

Sick and Family Leave Credits for Self-Employed

The new Families First Coronavirus Response Act has tax relief for self-employed people who couldn’t work due to coronavirus. Self-employed people might qualify for tax credits if they were unable to work for a reason that would have allowed them to claim coronavirus-related sick or family leave had they been an employee.

Boost Your Retirement Savings 

For those saving for retirement, the IRS has increased the employee contribution limit for 401(k), 403(b), and most 457 plans to $19,500, from $19,000 in 2019. For those over 50, the catch-up contribution limit has been raised to $6,500, from $6,000 in 2019.

Not being aware of changes in income tax laws could have you leaving thousands of dollars on the table. To make sure you maximize your refund, consider having your taxes done by a professional tax expert who will know all the relevant tax laws for your situation.

At Georgen Scarborough Associates, PC, we provide various accounting and tax services to people in Virginia, Maryland, and District of Columbia (DC). We provide tax preparation services for individuals, families, estates and trusts as well as other accounting services. If you need help or advice filing your tax return, please contact one of our tax preparation experts today.

Tax Tips for First-Timers

tax filing tips

Whether you have just reached adulthood, or are a new resident in America, the first time you file your income tax return can be a daunting experience. Here are some tips to help you through the process.

Do I even need to file a tax return? 

It’s possible that if your income is below a certain amount, you will not need to file an income tax return. However, if you want to claim any refundable tax credits, or get a refund for any income tax withheld from your paycheck, you must file a tax return.

Make sure you have all your tax documents 

Before you start, make sure you have all your tax documents ready. These can include:

  • W-2 (Wage and Tax Statement)
  • 1099 (Income other than employment income)
  • Educational expenses
  • Supporting documents such as receipts

What forms you need will depend on your individual circumstances, so think about things that could impact taxes like any change in your job, selling stocks or other investments, opening retirement accounts, or medical expenses.

Remember all your side income

If you have earned income from freelancing work like rideshare driving or deliveries, don’t forget to report that income on your tax return. You can often deduct expenses related to your work like maintenance costs to your car, insurance, supplies etc.

Claim all your relevant deductions and credits 

Deductions and credits can lower the amount of tax you owe or increase your refund, but you must file and claim them to take advantage of these. Common deductions for first-time filers include:

  • Education credits
  • Student loan interest deductions
  • Home office deductions for self-employed people

Choose how to file 

There are many ways to submit your income tax return. You can go old-fashioned and file by paper through the post office, but if you want your refund quickly, you should consider filing online or having your taxes done by a tax preparation service.

At Georgen Scarborough Associates, PC, we provide various accounting and tax services to people in Virginia, Maryland, and District of Columbia (DC). We provide tax preparation services for individuals, families, estates and trusts, and other accounting services. If you need help or advice filing your tax return, please contact one of our tax preparation experts today.

Tax Planning TIps to Maximize Your Return

ta returns

As you prepare to file your tax returns, you should also be planning to maximize them, reduce your tax bill and/or get the biggest refund you can. Many unseasoned tax payers are not sure how to do this and feel reluctant to make claims due to their lack of knowledge. For their benefit, we present some simple, key steps to planning and maximizing your return.

Know your bracket

The IRS has seven income tax brackets and which one you fall into depends on your level of income. First, know what percentage of your income you are required to pay, then understand that you will not actually pay those percentages on your full income. This is because you will be able to make deductions from your taxable income. So first determine your tax bracket, then break down your income into the prescribed income types that you earn. Each part of your income will be taxed differently.

Tax deductions and credits

Next, make sure that you know the difference between tax deductions and tax credits. Tax deductions are expenses you’ve incurred that you can subtract from your taxable income. Credits actually give you a dollar-for-dollar reduction on your tax bill. Once you understand how these work, you then need to find out which deductions and credits you are actually eligible for. Often people don’t even know that they can deduct certain expenses from their tax. You need to claim for each and every deduction you are eligible for, so make a point of knowing them all. There are hundreds and not all of them will be applicable to you. If you want to maximize your return, make use of every permissible, applicable deduction you can find.

Know when to take the standard deduction

The IRS offers a standard, no-questions asked deduction, which you can choose to take or you can opt for an itemized deduction that is calculated from your specific mix of deductions. Which one you choose to take will depend on the higher amount. If you can submit an itemized list of deductions and it comes up to more than the standard deduction, then you should itemize your deduction. If not, it’s best to opt for the standard one.

For additional, personalized assistance with your tax returns, contact Georgen Scarborough.

Tax deductible donations: Subtract the value 
of your charitable gifts from your taxable income

Are you an individual who regularly donates to charities and charitable organizations? If so, you may be eligible to claim sizeable tax deductions. Here is what you need to know about how much you can deduct, how to claim tax deductible donations, as well as various qualifying criteria to keep in mind.

How much can I deduct?

You will be eligible for a tax deduction if your donation is given to a tax-exempt organization, as defined by section 501(c)(3) of the Internal Revenue Code. In most cases, you will be able to deduct up to 60% of your adjusted gross income via charitable donations. However, this does depend on the type of contribution that you made and the organization that received it.

If you exceed the limit, you will still be able to deduct the excess from tax returns over the next five years via carryover.

How to claim tax deductible donations

The only way is to itemize at tax time. In other words, you will need to fill in Schedule A along with the rest of your tax return. Try to do this ahead of the deadline, as it can prove much more complex than the average tax return.

Is volunteer work tax deductible?

Unfortunately not. However, mileage related to your volunteer work can be – as long as you are volunteering at a qualified organization.

Looking for a company to assist you with your tax deductible donations or your tax filing in general? Get in touch with the Certified Public Accountants at Georgen Scarborough Associates today!