We get asked this question all the time, “I do not have a tax problem. Do you do normal taxes?” The answer is an astounding YES!!!! We provide quality tax preparation services nationwide.
Tax Preparation Software Guidance
Tax preparation software is very popular for a good reason because it is inexpensive or even free. We recommend using tax preparation software for simple tax returns.
- You have one W-2 and some bank interest
- Your only deductions are property taxes, mortgage interest, and charitable contributions
- You have medical expenses and/or dependent care expenses
- You mainly earn social security income
- My spouse is a teacher and we can write off educator expenses
If you have other items to report, then we recommend you get your tax returns prepared by a professional. Tax preparation software asks many questions to prepare your tax return. You may not know how to answer some of the questions. If you answer a question incorrectly, then the tax return will not be correct and you’ll never know it.
We had a client that got into IRS trouble because they answered a question incorrectly in the tax preparation software. We reviewed the tax return and noticed employee expenses were claimed twice. The husband and wife each deducted employee expenses. We asked questions about the employee expenses. Their response, only the husband had employee expenses. Ouch! If they got their tax returns prepare by a trusted tax preparation company, this wouldn’t happened. The client paid a high cost for their mistake.
Consider using a trusted accountant to prepare your returns if you have any of these transactions.
- Employee expenses
- Rental real estate
- Self Employed or Business
- Education expenses
- Many stock transactions
- Debt cancellation
- Sale of your home
- Health Savings Account
- Residential Energy Credit purchases
Tax preparation software is an inexpensive option for simple tax returns. We do not recommend you using tax preparation software if your return is slightly complicated. Accidentally making a mistake on your tax return can be costly. Also, it is comforting to know your tax return was prepared correctly by a professional.
Unfiled IRS and State Tax Returns
If you don’t file your tax returns, the IRS may file a tax return on your behalf.
What documents does the IRS use to file my tax returns?
Every year you receive tax documents such as W-2s and 1099s. Copies of the W-2s and 1099s are also sent to the IRS. The IRS will review the W-2s and 1099s to determine if taxes are owed. If the IRS expects you will owe taxes, the IRS may file a tax return for you. Tax returns filed by the IRS are called Substitute for Return, SFR.
Will the IRS include deductions and dependants on the returns they file?
The SFR will report the highest tax possible. This is because the IRS will file you as single, no dependents, no business deductions, and no itemized deductions. The taxes can be quite high!
Will the IRS also file my returns if I am due a refund?
However, the IRS will not file a tax return on your behalf if there is a refund.
What about unfiled State Tax Returns?
Similar to the IRS, the State may file tax returns on your behalf. However, the state’s process of preparing a tax return for you is different compared to the IRS. Unlike the IRS, the State does not have detailed records of W2s and 1099s filed. The State will estimate your income based on the best available information. This may mean the state prepares a tax return that makes no sense. Generally, the taxes owed from a state prepared tax return are exceptionally high.
If the IRS or the State has already filed my returns, can I still file my own?
Yes, you can prepare your own tax return to reverse the tax return filed by the federal and state tax agencies. The IRS or State will processes the tax return you prepare. The tax balances will be adjusted to match the taxes reported on the return you filed.
We highly recommend filing an your own return if you have any one of the following:
- Filing married filing joint, head of household, or surviving spouse
- Claiming one or more dependents
- Reporting business deductions
- Have itemized deductions
- Reporting basis information for stock sales
- For any other reportable credits and deductions
What is the process for businesses? The process for business is the same as for individuals. For instance, if your business has unfiled payroll taxes, the IRS may file form 941 and 940 tax returns for your business. In addition, the State may file Sales, Use or withholding tax returns for your business.
If you haven’t filed your returns, you should file. The longer you wait the worse your situation becomes.
If you owe money once you file, We can help you figure out the best program to pay your tax (installment agreements), defer collection (CNC Status) or even lower your tax bill altogether (Offer in Compromise or Penalty abetement)
What’s Next …
Every tax case is different, but EVERY case has a solution. Click below for a free consultation with a professional that can talk with you about your specific situation and guide you to the correct solution.