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“You Get What you Pay For” Tax Filing Advice

Posted on 09, Jul, 2012


You don’t mind spending money on an expensive tuxedo, or a nice car. You are more than willing to pay extra for services at five star restaurants, cool gadgets and what not. So, why the hesitation on choosing the right accountant for your tax return? If your conviction tells you that you could have had better use of  that money, you couldn’t be more mistaken!

It’s easier said than done to see your hard-earned income go away in form of your tax return fee.  But it’s no different than any other resource, property, luxury or amenity you buy. Only in this case, your purchase isn’t something you’d necessarily enjoy (unless receiving a handsome refund); instead it is something without which you cannot function, like security, water, transport, and such services where it’s difficult to place a value.

In order to provide properly for your taxes, each item has to work its part, and for that you need good tax planning and preparation.

Your tax return depends on how you handle your personal and business finances, because the more you earn, the more you may be entitled to pay. Any transaction, purchase, sale or investment may count toward your taxes; so, if you want to optimize, it is necessary to understand how much each of your procurements will cost you, tax wise. That way you won’t have to pay any more taxes than you need to!

Availing tax deductions and tax credits is one way to do this.  Federal tax law liberally allows credits in tax for low wage earners, elderly and disabled, mortgage debtors, children, or for particular investments, etc. Tax deductions are another way, which are allowed on necessary business travels, cost of goods sold, losses, personal allowances and such others. Exemptions on taxes such as health costs, social services, retirement planning can also help keep your tax rate low.

Estimating and anticipating current and future monetary value of you assets and income is key to tax preparation.  Choosing the right form of business or keeping proper business transactions will help manage your tax returns properly. For instance, whether your business is a Sole Proprietorship, Partnership or a Corporation matters in your tax rate planning. Even your personal status counts. These will help you adjust your taxable income.

Bookkeeping is another important aspect of planning your tax returns. Proper bookkeeping ensures that you know every detail of your financial history and are aware of your current situation. Bookkeeping entails record of every transaction which passes through your hands. It makes it easier for you to predict your taxes and analyze for tax deductions. It’s always better if it’s on paper!

But these functions are not something everybody who’s not an accountant or a financial savvy person is comfortable with. So, it is better to seek help from a professional financial consultant who’ll ensure your taxes are paid properly, in time and in full.

Even if it’s cumbersome for you, don’t try to get out of tax payments, since the consequences can lead to penalties or having IRS on your back, and in extreme cases, a tax lien.

After all, you get what you pay for!

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