This article, authored by Claudia Mott, was originally posted on NJMoneyhelp.com
Q. I have a pretty simple tax return — just W2 income and no real deductions that I can think of. I’m a renter. Should I do my taxes online with software or is there a reason to hire an accountant? I don’t know if it would be worth the cost, but I’m nervous of making mistakes and getting audited.
A. It’s a great question.
When it comes to filing tax returns, accuracy is a very important consideration as no one wants to receive an audit notice from the IRS, said Claudia Mott, a certified financial planner with Epona Financial Solutions in Basking Ridge.
With a straightforward return, the software tools that are available both online or via desktop will step you through each piece of information that needs to be entered, she said.
“The programs will also look at your overall picture and help you determine whether a standard deduction or itemizing would be more beneficial for you,” she said. “Before anything gets filed, there will be a review process that will point out possible errors or inconsistencies as compared to past years. One of these tools may be perfect for you.”
Depending on your income, the IRS also offers a free tax preparation service called VITA, which stands for Volunteer Income Tax Assistance.
For more than 50 years, volunteers who are trained to prepare tax returns assist those with incomes under $60,000, the elderly, and limited English-speaking taxpayers, Mott said.
You can find one at www.irs.gov, and then typing “VITA” in the search box. Locations in New Jersey can also be found at www.nj211.org.
A professional tax preparer such as a CPA or enrolled agent can be valuable when your return becomes more complex and their experience and knowledge can ensure accuracy, Mott said.
Reasons to consider hiring a pro include if you purchase a home and have mortgage interest and property taxes that might enable you to itemize, if you have investment income or sales of investments that include capital gains or losses, or you own a small business or a rental property and need to complete the appropriate tax schedules, Mott said.
“When it comes to peace of mind, the cost to have a professional prepare your return may be priceless,” she said.
Email your questions to Ask@NJMoneyHelp.com.
This story was originally published on March 17, 2023.
NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.