When someone's income and deductions do not change much from year to year, a taxpayer might file annual returns by him/herself. They might not have had any problems with the Internal Revenue Service for several seasons, but a letter may come in the mail informing the taxpayer that they made a mistake because the law changed. One overlooked benefit of working with a professional tax preparer centers on the professional's requirements to know the law. A self-filing taxpayer may need to catch up with changes and revisions to the US Tax Code, but a professional preparer must know current rules and regulations. So, working with a tax preparer could avoid problems.
Changes in the Taxpayer's Favor
Not all the changes made to a tax return are adverse. Sometimes, the taxpayer might assume they owe money when they do not. Again, rule changes may affect payment obligations. During the Covid pandemic, not every person realized that individuals submitting 2020 returns realized the requirements to repay advanced Affordable Care Act premium tax credits were suspended. So, they might not have overpaid their income tax that year. While receiving a refund after assuming you owed money might be a pleasant surprise, the refund check could arrive several months after filing the return.
Overpaying and Not Knowing
Returning to the 2020 Premium Tax Credit suspension example, a person may have overpaid their taxes by $3000, not realizing the suspension went into effect. So, money that could have covered other bills or gone into an individual retirement account went to the IRS unnecessarily. The IRS might pick up on the mistake and correct the return, but the process may take several months. The unexpected refund might not arrive for several months. If a knowledgeable tax preparer worked on the return, he/she may catch the mistake and inform the taxpayer of the repayment suspension.
Worries about an Audit
Not all rule changes work in the taxpayer's favor. Upon discovering mistakes on a return, the IRS could send an audit letter. Again, the taxpayer could commit an error because they do not know the law changed. An audit might not occur expediently, and the examination notice could arrive up to three years after filing a return. So, having a tax preparer look over previous years of self-filed returns might be a good idea. The preparer may find an error and suggest amending the return to correct the return.
For more information, contact a company such as Taxes- The Balance Sheet.Share