The Best Way to Save Money on Your Taxes

If you ask around you will likely find that most people think they pay too much in taxes. If you keep asking around you will find that almost everyone is looking for ways to save money on their taxes. They scrape around for the best deductions, they buy cheap tax software, they give their possessions to charities and they donate money to non-profit organizations. What if I told you there was an easier way to save money on your taxes?

Hire an Accountant

You may look at the cost of doing your taxes as just that: a cost. A simple tax program will run you about $30, and you think that price can’t be beat (aside from a free version, and if you have a simple tax return the free version will likely be your best bet). The true cost of using that cheap software is that you miss out on a lot of deductions, and you spend hours and hours of your time.

Hiring an accountant might cost 10 times as much as doing your own tax return costs you. The price tag alone is enough to deter most people, and that is why programs like Turbo Tax sell millions of copies every year. But the truth is that almost everyone who hires an accountant ends up saving money.

How an Accountant saves you Money

When you use a software program, you rely on the program to find all of your deductions. They are written in such a way that you are alerted to most of them. However, they can only go so far. For instance, suppose you donated 10 pairs of jeans to a thrift store and decided to write off $50 (you figure the pairs will sell for about $5 each at the store). An accountant can look at that and realize you could write off $120 (this varies by state). You instantly get another $70 deduction just from the jeans you donated.

The benefits don’t just stop at more deductions. An accountant can see your overall financial picture. They can offer advice as to where you should store your money, give you insights on other tax issues, and they are available all year round to answer questions. By contrast tax software is only available for a couple of months, and that availability is in the form of an automated response system.

Test it Out

When you do your taxes next time, buy the $30 software and do your own taxes. Then find an accountant that you trust (referrals are the best way to do that). Take all of your documents to the accountant and see what he or she comes up with. Chances are you will have missed something, and the accountant will get your tax refund up high enough to not only cover the costs, but also get you more in your pocket.