Every year, I ask my clients a question: “What was your largest expense this year?” The response is somewhere between ‘auto expense’ and ‘mortgage expense,’ but I do occasionally hear ‘food and entertainment expenses’ top the list. However, it is rare when someone states that ‘taxes’ are their number one expense.
So, ‘if’ taxes are our largest expense, and the Internal Revenue Code is notoriously one of the most complicated books on the face of our planet, why do so many people believe they can master their own tax planning and filings on their own?
We’re less than three months away from the personal income tax filing deadline and people have already began receiving their employer and income related tax forms. Are you filing your taxes yourself? If so, you’re one of the 40% who personally prepare and file on their own. Sure you are going to save some money in tax preparation fees. But are you really saving money in the long run by doing it yourself?
According to the Tax Policy Center, a joint venture of the Urban Institute and Brookings Institution, it is estimated that the federal government will take $2,712,000,000,000 from the American people in 2013. In fiscal year 2012, the government of California alone took more than $112,000,000,000 from the hands and paychecks of people living in its state. For 2013 and beyond, the ‘take’ will be even greater due to our ‘new and improved’ higher tax rates.
But what can you do to legally keep more of your hard earned money for you and your family instead of allowing the government to take its fair (or not so fair) share? If you have even the slightest desire to keep more of your earnings, there may be a variety of ways to do so…but it is my recommendation to consult with a tax professional before trying to implement any of those strategies.
The Internal Revenue Service occasionally releases tips on how to make sure your tax strategies are congruent with applicable tax codes. Here, they released the 2013 “Dirty Dozen” tax scam favorites currently circulating around. Hopefully, none of these affects you:
- Identity Theft
- Return Preparer Fraud
- Hiding Income Offshore
- Free money from the IRS and Tax scams involving Social Security.
- Impersonation of Charitable Organizations.
- False/Inflated Income and Expenses.
- False Form 1099 Refund Claims.
- Frivolous Tax Arguments.
- Falsely Claiming Zero Wages.
- Disguised Corporation Ownership.
- Misuse of Trusts.
If you think that saving a few hundred dollars by planning and preparing your own tax filings each year is going to put you in a better position, why stop there? Why not: do your own gardening; fire your house keeper; change your own oil; cut your own hair; make your own lunch; and/or workout around the house and eliminate your gym membership? Surely, these changes would save you THOUSANDS of dollars per year, right?
Since my office is shared with competent licensed Enrolled Agents, why not make it a convenient one-stop-shop to see how they can help you to minimize the amount of taxes you legally have to pay? A free consult could lead to hundreds or even thousands of dollars being saved! Just call my office and I’ll schedule a personal introduction.