Financing a Home, Interest Rate News
Taxes Are Your Biggest Expense!
March 19, 2010 by Jeff Thomas · Leave a Comment
Fairfax, Virginia: Do you realize that your biggest expense every month is TAXES? If you don’t believe me, just look at your paycheck and see how much you earned versus how much you are actually bringing home! As you strive to save more money, eliminate debt, and build a successful financial future, minimizing your tax expenses each year can make a huge difference in your financial success.
The Internal Revenue Code is more than 67,000 pages! Once you determine the proper forms you must complete, it can take hours to complete them properly. Mistakes can be costly, leading to you paying more taxes than you should, or underpaying which can lead to penalties and interest.
Fairfax, Virginia taxpayers who do their own taxes often refrain from claiming deductions, exemptions and credits they are entitled to out of fear of making a mistake or not understanding. The result: They pay far more in taxes than they actually owe. And tax-preparation software is of debatable help. If you skip or misunderstand a question, the software will produce the wrong forms or complete them incorrectly. (*According to the Treasury Department, 56% of all the returns prepared in 2007 by volunteer tax preparers contained mistakes!)
It’s much better to have a certified public accountant (CPA), enrolled agent (EA) or tax attorney prepare your return for you. With narrow exceptions, these are the only people who can represent you in matters pertaining to the IRS.
As a tremendous insurance policy, if your CPA, EA or attorney makes a mistake that causes you to owe additional tax, you’ll pay only the tax. They will pay any interest or penalties owed. (It’s unreasonable to ask preparers to pay the tax itself; that’s always the taxpayer’s responsibility.)
Ric Edelman, author and top financial planner says, “If you are concerned about the costs of using a professional tax preparer, think of if from a different perspective. According to the latest statistics released by the IRS, the typical married couple in 2005 with an adjusted gross income between $75,000 and $100,000 per year paid $7,300 in federal income taxes. That’s an effective tax rate of approximately 8.4%.” If the CPA, EA or tax attorney’s fee is $600, that’s just 0.7% of their income. Considering all the time and aggravation saved, plus interest and penalties resulting from errors you might make, this relatively small fee can be well worth it.
By the way, the fee you pay your tax preparer is tax-deductible. If you don’t already have one and need a referral, contact us at jeff@lendingsolutions.net or 571-482-8301.
