preparing for self-employment taxes
Should You Hire A Tax Professional This Year?
Denley Van Der Borgh
Tax day is right around the corner. Will you be ready? Some people have it easy tax prep-wise; They go to work, come home, and make small purchases that don't require much documentation. Teenagers usually fit into this category. However, most responsible adults do things that can make their taxes quite difficult to prepare. Several of these situations will be discussed presently, but you should know that there is a relatively easy fix to hard-to-prepare taxes: hire a professional. You may need to spend more than it would cost to do it yourself, but you will have the assurance that they are done correctly, and that should something go wrong, you will have someone to stand with you in an audit.
Here are a few situations that can make taxes difficult to prepare. If you fall into any of them you should think about hiring someone to prepare your taxes.
Large Purchases
Large purchases such as a home, boat, car, major renovation, or recreational vehicle can make your taxes a little more tricky to complete. This is usually because the sales tax and mortgage interest is deductible. That means that you may be able to get some portion of the money you paid back in your pocket if you add them to your itemized deductions. In 2021, the itemized deduction amount is $12,550 for individuals and $25,100 for couples filing jointly. If your deductions are more than that amount, you will save money by itemizing them, even though the process can be tedious.
Major Life Events
Getting married and starting a family is exciting, but it also makes your taxes much harder to do. Additionally, if you have been married and are now getting divorced, your tax situation will change, making it new and sometimes difficult to figure out.
Self-Employment
Self-employment taxes can be challenging because they are just so expensive. In the case of individuals who work for someone else, income tax is deducted from their paychecks by their employers. However, self-employed individuals must keep track of their income tax on their own. Otherwise, they could pay too much or too little and get into trouble.
In conclusion, instead of trying to save money by preparing your taxes on your own, messing them up, and hiring someone to fix them, just get them done right the first time. There is really no shame in needing help, and it may just save you time and money by hiring a professional.
Contact an accounting service, such as Hough & Co CPA, to get more information.
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Self-employment comes with a lot of responsibilities. Not only do you have to stay on top of getting your work done, but you also have to be aware of the taxes that come into play when you are self-employed. So, do you understand how self-employment impacts your taxes? Are you putting enough money aside to pay your tax bill at the beginning of the year? Do you file quarterly tax reports? This blog will help you stay on top of your self-employment taxes so that you don't find yourself stuck with a huge tax bill that you struggle to pay.