{"id":971,"date":"2020-04-20T07:48:46","date_gmt":"2020-04-20T07:48:46","guid":{"rendered":"http:\/\/www.unitedfinances.com\/blog\/?p=971"},"modified":"2020-04-20T07:48:46","modified_gmt":"2020-04-20T07:48:46","slug":"its-time-to-pay-up-how-hard-is-it-to-do-your-own-taxes","status":"publish","type":"post","link":"https:\/\/www.unitedfinances.com\/blog\/its-time-to-pay-up-how-hard-is-it-to-do-your-own-taxes\/","title":{"rendered":"It’s Time to Pay Up: How Hard Is It to Do Your Own Taxes?"},"content":{"rendered":"

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How hard is it to do your own taxes?<\/span><\/p>\n

According to <\/span>the IRS<\/span><\/a>, the average person will need about 11 hours to prepare a tax return. However, 11 hours can easily turn into 11 days or more, if you don\u2019t know what you\u2019re doing.<\/span><\/p>\n

If you\u2019re thinking about filing your own taxes, but aren\u2019t sure if you can, you\u2019ve come to the right place. We\u2019ve created a short guide highlighting the pros and cons of filing a tax return on your own. Whether you\u2019re filing as an individual or business, you should always know your options.<\/span><\/p>\n

Read on to find out what the best tax filing option is for you.<\/span><\/p>\n

How Hard Is It to Do Your Own Taxes? – Answered<\/span><\/p>\n

To answer the question, “how hard is it to do your own taxes?”, you have to consider your personal situation. Your experience and knowledge of tax law will go a long way towards making the process easy.<\/span><\/p>\n

For example, do you know what forms you\u2019ll need to submit with your return? Do you know all of the tax credits and write-offs you qualify for?<\/span><\/p>\n

If you don’t have any tax knowledge, it’ll take you longer to file your taxes. Next, ask yourself how organized you are.<\/span><\/p>\n

For instance, do you use tools like <\/span>Google Docs offline<\/span><\/a>, to keep track of your financial documents? Failing to keep accurate financial records can make the filling process take longer.<\/span><\/p>\n

When to Hire a Tax Professional<\/span><\/p>\n

If you\u2019re filing personal taxes, the process is fairly straightforward. As long as you haven\u2019t had any major life changes, you should be able to file on your own without problems.<\/span><\/p>\n

However, while filing on your own is easy, that doesn’t mean it’s the best choice. Hiring a tax professional can help you identify potential tax write off\u2019s. Write-offs you might otherwise miss.<\/span><\/p>\n

Let\u2019s say for example you’re a freelancer. Did you purchase any equipment for business purposes? If yes, it\u2019s possible you can write all of the equipment off on your taxes.<\/span><\/p>\n

A tax professional is also helpful if you\u2019ve had a major life event happen. Having a child, moving, getting married, or divorced, are all major events.<\/span><\/p>\n

When your life circumstances change, so do your taxes. A professional tax preparer might be able to identify tax breaks you never knew existed.<\/span><\/p>\n

When to Use Tax Software<\/span><\/p>\n

Using tax software makes sense if you have experience doing your own taxes. However, don\u2019t worry if you\u2019re not a tax whizz, all you need is a little bit of understanding.<\/span><\/p>\n

By using tax software, you\u2019ll automatically know what information you need to input. The online software will also do all of your calculations for you.<\/span><\/p>\n

Finally, tax software is great for individuals that are busy in the stock market. Software programs can automatically input data from different broker forms and securities transactions.<\/span><\/p>\n

Do Your Own Taxes as a Sole Proprietorship<\/span><\/p>\n

Are you operating an unincorporated business where you\u2019re the only owner? If yes, your company structure is a sole proprietorship. It\u2019s one of the easiest business structures to manage.<\/span><\/p>\n

Doing taxes for sole proprietorships is fairly straight forward. As the business owner, you can report all of your company\u2019s income and losses on your tax return.<\/span><\/p>\n

However, you do need to be careful when it comes to legal complications. Running a sole proprietorship means you assume all legal responsibility for your business. Should you not be able to pay your taxes, your personal assets are on the line.<\/span><\/p>\n

Should You Do Your Taxes as a Corporation?<\/span><\/p>\n

Is your business a corporation? If yes, you’re either an S corporation or a C corporation.<\/span><\/p>\n

C Corporation Taxes<\/span><\/p>\n

When you start a corporation, you automatically begin as a C corporation for tax purposes. You\u2019ll have to pay corporate income tax on all of your company\u2019s profits. The shareholders will pay taxes on any salary they receive, as well as any dividends.<\/span><\/p>\n

How hard is it to do your own taxes as a C corporation? As long as you\u2019re using a tax preparation software, you shouldn\u2019t have too much trouble. However, if you\u2019re thinking about restructuring to an S corporation, you’ll need help.<\/span><\/p>\n

S Corporation Taxes<\/span><\/p>\n

If you\u2019ve never filed a tax return as an S corporation, the filing process may feel a bit daunting. You\u2019ll have to use a completely new form, than the ones you\u2019re used to. The first time you file as an S corporation, have a tax professional help.<\/span><\/p>\n

An S corporation doesn\u2019t pay corporate taxes. Instead, the company\u2019s losses and profits wind up in the shareholder’s tax returns. To qualify as an S corporation you have to have fewer than 100 shareholders. T<\/span><\/p>\n

he shareholders can\u2019t be other corporations, nonresident aliens, or partnerships. You also have to be offering only one class of stock. Finally, to qualify, you\u2019ll have to be a domestic corporation.<\/span><\/p>\n

Mistakes to Avoid for Personal Taxes<\/span><\/p>\n

Filing taxes as an individual is easier than filing as a small business owner. However, you\u2019ll still need to be aware of the most common filing mistakes you should avoid.<\/span><\/p>\n

Here\u2019s a short list of easy to make tax mistakes:<\/span><\/p>\n