Every commodity and service associated with a certain amount of tax. This is the money that the government charges from us for carrying out these activities. The money collected from the tax is in turn used for the benefits of the citizens. It pays for all the infrastructure that the government plans and executes. Business is also subjected to tax. It involves a lot of calculation. One of the main questions encountered is that whether one can do his own tax preparation. The answer to this is an absolute yes. People who have a W-2 income can do so themselves. There is no need to hire a third party to file the tax returns. A number of software is available over the internet, which the people can use to file their own tax. It’s a very easy process. Most of this software does not cost much. The only cost associated is the cost of filing. But if people look into the broader picture, then the cost of filing is relatively insignificant.
But, this does not turn up to be such an easy task for a large number of people. There have been many instances where people have done the work themselves and later on regretted. This can happen to anyone. There are a lot of reasons associated with such cases. Some of the most important and noticeable ones are given below-
Unknown Relationship status for Tax Preparation
People commit a lot of mistakes when they fill the data relevant to this topic. They have a lot of options to choose from. But people do not realize the fact that the option marked by them under this criteria plays a very important role in determining the amount of tax that is to be paid up by an individual. Consider the case that someone marks up the box as married and filing separately. In such a case they cannot take credits of child’s healthcare or education. And moreover, some people tend to tick the box which tends to provide benefits. These people, in turn, face the problems of their actions later on.
The fat finger Syndrome
Errors incurred in tax filing can result in a tremendous amount of problems. Typing errors are very common and mostly overlooked while filing. Leaving off zero when you state an amount or select a different code accidently can cost you a lot of money. There have been cases when an individual has been taxed a huge amount and later on when the filing was done again, there was a huge difference. It was due to the errors involved in the filing process.
Problems with software
The software is the heart of personal filling cases. All the major calculations take place here. It is important to regularly update the software, both on the customer end as well as the service provider’s end. Some software lacks certain features and as a result, cost a huge fortune to its users.
Too much or too less of planning
Filing a tax return requires extensive planning. It is a smart move of beginning tax preparation for the upcoming year. But, a lot of things should be taken into consideration. This includes buying and selling of real estate properties, retirement etc. But if anything out of the ordinary happens than all the planning goes unfruitful.
Thus although easy, people should hire someone with expertise to file their tax returns. They should look at it as an insurance as well as an investment.