Tax Blog

Rethinking Doing Your Own Taxes


It’s the day of the Internet, Google, a computer on your desk, and an even better one in your pocket, Skype, Facetime, Apps, virtual currency and hybrid vehicles that never require a drop of gas. We can never get lost again, you can locate Jupiter and Saturn, you can watch your home from your office, never be late again, never lose anything, hold 1000 pictures of your cat in your hand, see what the weather will be by the hour, pay bills, even manage health conditions with an app.

You can even prepare your taxes without the use of an accountant.

There is no doubt, we’ve come a long way from the nineties when there were very few people who knew tax and could fill out a paper IRS form properly. Now that technology is widely available, many can create and file their own returns in a matter of an hour and avoid any issues going down the road.

On the other hand, there are those that need their taxes done by a CPA, attorney, enrolled agent or other qualified professional. Many taxpayers are walking, talking targets of the IRS. They include the following list of red-flag people:

  1. If you have over $200,000 in annual income or

  2. No income at all

  3. If you make $5,000,000, plan on getting audited in at some point once per nine years

  4. People who file estate tax returns

  5. People filing international returns for any form of income

  6. Those IRS claiming unusual deductions

  7. If you own a business and do or claim any of the following:

  8. Business Losses

  9. Rental Properties

  10. Loss Carryforwards

  11. Home Office

  12. Those who donate large sums of money including non-cash contributions in the form or property

  13. If you are paying Alimony

  14. You file a Paper Return

  15. The Earned Income Tax Credit

  16. Failed to include 1099

  17. If your numbers are TOO perfect

  18. Amend a return

  19. Have unreimbursed employee expenses

  20. Deduct 100% of a business vehicle

  21. Hobby Loss – don’t go there

  22. Business all in cash

  23. Own - Currency Transactions and Bitcoin

  24. If a Third Party calls an gives them an anonymous tip

  25. If you have a Sketchy Tax Preparer

  26. Or a loan to shareholder on your books…you will attract attention.

If you do all 22 items, expect a letter from the IRS at some point in your future.

The long and short of it- If you fall into one of the above listed items, do not take a chance on dodging an audit and THEN having to hire a representative to represent you in front of a skilled IRS agent.

And One Huge Reason -

Change of Life: In practical application, a questionnaire will not catch everything – Did you have a baby? Buy house? Get divorced? Or have income job related expenses? While these are not audit indicators, a change of life represents a change on your tax return that should happen as well. Not every change of life will change your tax return, but many do.

You would not swap out engines in your car, you would not rewire your house solely on your own. Taxes should be one item taken seriously. Even if you don’t fall into one of these categories, be sure to at least have your accountant review your taxes. Don’t risk having to talk to an auditor or IRS agent.

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