CPA

Why Individuals Should Hire a CPA to Prepare Their Taxes

February 2, 2023 by kris_admin

It’s tempting to rely on TurboTax or another tax software package when it comes time to file your taxes for the year. Doing it yourself seems more convenient and less expensive, but most filers will miss out on legitimate deductions unless they have a deep knowledge of tax law and its yearly changes. When deciding between hiring a professional CPA or using automated online software, your financial situation should be taken into consideration along with your level of knowledge of IRS guidelines.

If you are single, have a single employer and few or no investments, you may be a good candidate for using a low cost tax software. However, if you hold retirement accounts, are married, have a family, own a business, work freelance, receive an inheritance, bought or sold a home, or receive rental property income, you may want to hire an accountant for your peace of mind and to help you save money on taxes. Although TurboTax and other programs are user friendly, each has its own limitations. If your financial situation becomes complex, spending the additional money to hire a professional can save you a lot of money in the long run.

What is A CPA’s Duty?

CPAs assist in numerous accounting areas, including taxes, financial accounting and reporting, tax and accounting audits, and financial planning. Here are some of the most typical ways in which a CPA can assist you with your tax and financial needs:

They give guidance and help with tax forms and filings. When dealing with tax issues that are particularly difficult or time consuming, it is generally beneficial to hire an expert.
They notify you of your tax obligations and available tax deductions. Certified public accountants are experts at determining your taxable income, calculating deductions and credits, and reporting all of your income streams.
They can communicate with the IRS on your behalf, including managing audits. CPAs are familiar with the questions the IRS may pose and can supply the needed information.
They separate your personal taxes from your corporate taxes. Whether you want to organize a partnership, an LLC, or an S-corporation that will be taxed as a C-Corporation, a certified public accountant can help you structure it.

Benefits of Hiring a CPA for Tax Planning & Tax Preparation

Evaluating the Options For Your Retirement Account

When deciding how to save for retirement in a tax-efficient manner, it may be beneficial to consult with a CPA. This is particularly true when you consider the variety of investment options available for growing your retirement savings. You will want to utilize your retirement options to the fullest extent possible if you are self-employed and likely have even more choices than employees.

Adapting to a Tax Adjustment Caused by a Life Event

Life events like marriage and having children can have a major impact on your tax liability. You may need to modify your tax strategy when a major life event occurs. A CPA can also provide guidance during major personal transactions, such as the sale of your home or the purchase of a new home.

Helping Freelancers & Small Business Owners Make the Most of Tax Deductions

When you choose a CPA firm to prepare your taxes, they can work with you to optimize your tax deductions. If you freelance or are a small business owner, you are likely missing out on many tax deduction opportunities. A seasoned CPA possesses extensive tax knowledge. They will work with you to identify and optimize as many business deductions as allowed under the law. When you hire a professional accountant, they will actively look for ways to reduce your tax liability, allowing you to save money in the long run.

CPAs can also assist you in prioritizing your business objectives by performing administrative tasks such as budgeting, bookkeeping, financial accounting and reporting, tax planning, and tax preparation.

Dealing with Complicated Tax Matters More Efficiently

If you are a business owner, you may find yourself entangled in complex business and investment matters requiring a deep understanding of tax laws. A CPA is proficient in tax law and tax codes and will be able to advise you on even the most complex tax situations for your business. A CPA can quickly and easily complete tasks that would require an individual taxpayer hour of fruitless research in an attempt to find the correct information.

Should You Rely on Tax Software or a Tax Professional?

Online tax filing software like TurboTax can seem like a good option, but unless you have an extremely simple tax situation, the one-size-fits-all approach usually fails to maximize an individual’s potential return.

Need Professional Tax Preparation & Filing? Contact Us Today!

If you need an expert to help prepare and file your taxes, contact us at Steven Lissner & Company today. Our experienced tax professionals will handle your tax preparation and tax filing and assist with other tax-related matters. We’re proud to serve clients right here in our community of Mountain Lakes, as well as all across New Jersey, New York, and Pennsylvania. Call us today to learn more about our tax preparation and tax planning services.

Changes in Tax Laws For 2022

December 9, 2022 by kris_admin

tax preparation and planning 2022 cpa NJ

Tax time is just around the corner! There are a few end of year things you can do to maximize your 2022 tax return. It’s also important to understand some of the changes in tax law between 2021 & 2022 so you don’t get caught unaware.

In most cases, the more tax planning you engage in, the more money you may be able to save. And, if you discover something now that will minimize your 2022 tax liability, you still have time to act before the end of this year. Wise taxpayers need to be informed of the many changes to the tax law for the 2022 tax year to make proper planning decisions.

Tips to maximize your 2022 tax return

Maximize Retirement Savings

There are many significant changes to retirement plan and IRA contributions for 2022. For instance the maximum 401(k), 403(b), and 457 contributions have increased from $19,500 in 2021 to $20,500 in 2022. IRA contribution limits increased from $6,000 in 2021 to $6,500 for 2022. Those born before 1973 will once again be eligible to make a “catch-up” contribution of $1,000 for 2022 as in 2021. IRA contributions are limited by taxable compensation limits.

Stock Portfolio Review

No one likes to lose money, but the stock market can be unpredictable at times causing some stocks to lose value and not bounce back. You can make the most of this situation by selling those stocks at a loss to offset other income liabilities.

Give to Charity

Did you get an extra large bonus this year? Do you expect to realize significant gains from a long term investment? It’s a good idea to look at your overall income estimate for 2022. More income means a bigger tax bill. The good news is that there is still time to offset taxable income with charitable giving. Determining the right amount of charity can be complicated, and everyone’s situation is unique, so it’s important to hire a professional CPA like Stephen Lissner & Company to assist you with your tax planning.

Important tax law changes between 2021 & 2022

2021 Tax Cuts Will Expire

For tax year 2021, significant tax cuts were passed. However, the majority of such tax cuts expired at the end of 2021. These changes affect the earned income credit, child and dependent care credit, and other well-known tax credits for the 2022 tax year when compared to the 2021 tax year. Take a look at the most significant changes listed below, but be sure to hire a tax professional when preparing and filing your taxes so you can rest assured you have filed your taxes correctly and aren’t missing out on any eligible deductions.

The Inflation Reduction Act

Your 2022 tax return may be affected by the Inflation Reduction Act. New laws or yearly inflation adjustments will cause other 2022 revisions.

Child Tax Credit

For 2021, the child tax credit underwent significant adjustments, however, they were only in place for one year. For the 2022 tax year, the child tax credit reverts to its pre-2021 form. In 2021 the credit amount was $3,000 for children aged 6 to 17 and $3,600 for those under 5. The child tax credit for 2022 is now $2,000 per child.

This year, children who are 17 years old do not qualify for the credit, as the previous age limit of 16 years old returns. The 2022 credit is only partially refundable for some lower-income taxpayers (up to $1,500 per eligible child), and they must have earned income of at least $2,500 to benefit from the credit’s limited refundability.

You may have noticed during 2022, monthly credit advance payments stopped.

Child and Dependent Care Tax Credit

The child and dependent care credit had also undergone significant improvements for 2021. However, those modifications were only in effect for 2021. Comparatively, the 2021 credit was worth up to $8,000 in eligible expenses for one qualifying child/dependent, or $16,000 for two or more, or 20% to 50% of those amounts. As income increased by over $125,000, the percentage fell. Also entirely refundable in 2021 was the credit. The child and dependent care credit are not transferable until 2022.

Additionally, the highest credit proportion decreases from 50% to 35%. The credit is also available for fewer care costs. For 2022, the credit is only available for expenses totaling $3,000 for one child or dependent and $6,000 for multiples. If the 35% maximum credit percentage is used, the maximum credit for the 2022 tax year is $1,050 (35% of $3,000) for families with just one child or dependent and $2,100 (35% of $6,000) for families with more than one child or dependent.

Earned Income Tax Credit

The number of workers who could claim the earned income tax credit (EITC) on their 2021 tax return increased, including both younger and older individuals without qualifying children. Also, higher were the “childless EITC” amounts. But once again, those changes were only for 2021. For 2022, the minimum age for a worker without children to collect the EITC increases to 25 for tax returns in 2022. (it was 19 in 2021). There are special cases written into the tax law, so you should always confirm your current eligibility with a licensed CPA.

The maximum age restriction, typically set at 65 years old, was removed for the 2021 tax year, but has been reinstated for the 2022 tax year. Additionally, the maximum credit for workers without children is reduced from $1,502 in 2021, to $560 for the 2022 tax year.

Tax Brackets

While there was no change to the tax rates, the income tax brackets were expanded for 2022. The change is attributable to inflation throughout the 12-month period beginning September 2020 to August 2021, which is utilized to calculate the adjustments.

Tax Rates in 2022 for Single, Married Filing Jointly, and Head of Household

Tax Rate	Taxable Income (Single)	Taxable Income (Married Filing Jointly)	Taxable Income (Head of Household)
10%	Up to $10,275	Up to $20,550	Up to $14,650
12%	$10,276 to $41,775	$20,551 to $83,550	$14,651 to $55,900
22%	$41,776 to $89,075	$83,551 to $178,150	$55,901 to $89,050
24%	$89,076 to $170,050	$178,151 to $340,100	$89,051 to $170,050
32%	$170,051 to $215,950	$340,101 to $431,900	$170,051 to $215,950
35%	$215,951 to $539,900	$431,901 to $647,850	$215,951 to $539,900
37%	More than $539,900	More than $647,850	More than $539,900

(chart from: https://taxfoundation.org/2022-tax-brackets/)

Stimulus Program and Recovery Rebate Credit

Both the stimulus program and recovery rebate credit ceased in 2021.

Working and Living Abroad

In 2022, there will be a higher foreign-earned income exclusion for taxpayers who work abroad. It increased from $108,700 for 2021 to $112,000 for 2022. The exclusion is claimed by tax paying parties on Form 2555. For 2022, the $15,218 standard ceiling on the foreign home exclusion will rise to $15,680.

Contact A CPA ‘Near Me’ Today!

Contact us at Steven Lissner & Company to learn more about our services. We are committed to offering quality tax planning and preparation services to individuals and businesses in Mountain Lakes, and across New Jersey.

Tax Planning for Small Businesses

November 7, 2022 by kris_admin

There never seems to be sufficient time for a small business owner. Because of this, tax planning often gets put off until later, if at all. However, investing time and energy into tax planning usually pays off in the long run. Once returns have finally been filed, most individuals don’t want to think about taxes again.

However, planning for tax season early on can have a significant impact on your financial standing. The great majority of company owners, however, are genuinely too preoccupied with running their businesses daily to think much about their taxes for the following year.

A common misconception is that only large corporations and super-wealthy persons can benefit from tax planning and the significant savings it provides. If you do your taxes right, you may be able to cut your tax bill by half or even greater, which means more money for where it really counts: expanding your business.

What is Tax Planning?

Tax planning involves more than just figuring out how much money you’ll need to set aside at the end of the year to cover your taxes. Ultimately, it’s making sure that your complete financial picture fits together so that you owe the least amount of money in taxes at tax time.

What’s more, numerous factors are taken into account during the planning stage, such as budgeting, the timing of purchases, tax breaks, and other credits and deductions. This procedure will also guide you toward the best investing and retirement plans for your specific needs and tax situation.

What are the Benefits of Tax Planning for Small Business?

Here are some benefits of small business tax planning:

1. Helps You Save Time and Make Fewer Errors

Having a solid tax plan in place from the start will save you a ton of time all through the year, especially during tax season. One of the most typical challenges for entrepreneurs is that they are too preoccupied with day-to-day operations to provide adequate attention to developing a sound financial plan for their company’s future.

Having a strategy in place could help you save time, whether you’re trying to decide whether to make a purchase or attempting to get your finances in order before tax season. You won’t just save time in the planning stages; you’ll also avoid wasting hours correcting filing mistakes that could have been avoided. Clients frequently make the following mistakes:

· spending more money than they would usually to get a bigger tax break;

· overspending at the wrong time; and

· having no idea of how their taxes work.

If you have a good plan in place, you’ll know exactly what your tax liability will be months before it’s really due. Ensuring that your deductions and tax returns are error-free greatly minimizes your likelihood of getting audited.

2. Cut Down On Your Total Tax Liabilities

Tax planning’s primary goal is to maximize your company’s deductibles to minimize the amount of tax you pay. In other words, you’ll pay exactly what you owe and no more. Whatever your personal opinions on taxes, all business owners can agree that having more money available to invest in the expansion of their companies is a good thing.

When company owners find out about the many tax breaks and credits they may be eligible for, they are often taken aback. When you take the time to prepare ahead for your taxes, you can make the most of every opportunity. In addition, since you planned and educated yourself, you won’t have to worry about breaking any tax rules and incurring any of the hefty penalties that come with doing so.

3. Make Room for Future Business Growth

In the long run, your company will benefit from having a good fundamental tax plan since it will allow you to make more educated decisions that will improve profitability. You’ll be in a far stronger position to plan for the future, invest strategically in your company, and handle other financial matters.

In addition, tax preparation will educate you on how changes to your company’s operations and strategy affect your tax liabilities. The fact that you can avoid paying more in taxes is the primary reason for tax planning. You can invest the money you saved on advertising, technology upgrades, staff expansion, product inventory, and more.

Do I Need A Tax Plan?

It’s more crucial than ever to have a strategy in place given the continuously evolving political landscape in which we presently find ourselves. Many company owners may find that they owe more in taxes in the coming years as a change in government can result in changes in tax laws.

A tax plan is just one aspect of a well-rounded financial plan. Still, most individuals fail to account for this crucial detail, which causes them to overpay substantially at year’s end. It’s never too early or too late to make a strategy for your business, whether you’re just getting started or have been in the game for years.

You need to give this some consideration and get started, whether you decide to develop a plan on your own or work with an expert. Having a strategy in place will put you ahead of the game, free up capital for investment in the company’s future, and lower your tax bill in the long run.

Need Professional Tax Planning? Contact Us Today!

If you need proper guidance with your small business tax planning, contact us at Steven Lissner & Company today. Our experts will handle your tax preparation and filing while you concentrate on other important aspects of your business. We’re proud to serve clients in our local area of Mountain Lakes as well as many clients across New Jersey. Call us today to learn more about our tax planning & preparation services.

Why Use a CPA to File Your Taxes?

October 23, 2022 by kris_admin

Automation has become a popular buzzword in many industries, including tax filing services. However, the complex nature of tax laws and the unique circumstances of individual taxpayers and businesses result in a lot of missed opportunities when it comes to automated tax filing.

Is Automated Tax Filing a Good Choice For You?

Plug-and-play tax preparation software like TurboTax has become increasingly popular since the IRS introduced e-filing in the 1990s. These programs are marketed to consumers based on the ease and convenience of quickly inputting a few numbers and calling it a day. The trade-off is that a one-size-fits-all approach to tax preparation usually fails to capture the uniqueness of most tax situations and often fails to maximize your potential return.

If you are a new graduate with relatively few assets, an online service like H&R Block may be a good choice for you. However, if you are in any of the following situations, enlisting the guidance of a trusted tax expert is likely to give you the best opportunity to maximize your tax return:

You’re self-employed, whether as the owner of a small business or as a subcontractor.
You’ve experienced a significant life event like marriage, divorce, birth, death, business mergers, residential move, buying or selling a home, retirement, etc.
You receive income from rental properties, foreign investments, cryptocurrency, stock trading, etc., or a bevy of less common income sources.

The reality of using an automated tax preparation program is that it delivers precisely what it sells: tax preparation. But what most taxpayers need to maximize their returns is tax planning. The best place to seek tax planning is with an experienced and trustworthy CPA firm like Steven Lissner & Company.

A CPA helps you identify tax savings and investment opportunities that will compound your capital across the span of many years. When you use automated software to file your taxes, you may miss out on opportunities to lower your tax liability. Over time, these missed opportunities can translate into thousands of dollars in lifetime savings. That’s why it’s important to enlist the guidance of a CPA to prepare your taxes — so you can explore every opportunity to maximize your tax return.

Tax Planning Is a Year-Round Effort.

Effective tax planning happens all year, not just during tax season. That’s why you don’t want to wait until tax season to contact a CPA. Steven Lissner & Company can help you right now, so you approach the coming tax season with reduced tax liability and get the maximum benefit.

A skilled CPA is well-versed on the many strategies businesses and individuals can use to create a winning tax strategy. With HSAs, FSAs, IRAs and other types of accounts available, a CPA can offer suggestions on the best way to utilize the various options out there.

It’s important to understand that small financial decisions can carry big consequences as the years pass. Sound financial decisions can increase and compound your long-term savings, whereas a lack of strategy can stagnate your savings.

The reality is that automated tax preparation programs can help you evaluate your current tax year. But they do not provide recommendations for your future or identify missed opportunities with enough time to take advantage of those opportunities. Simply put, unless you’re already a tax expert, automated tax filing programs are a losing tax strategy.

Get the Best of Both Worlds

We’ve explained the pitfalls of automated tax filing, but it is important to note that not all automation is bad. In fact, most CPAs use an automated tax program to assist in calculating returns. But there are some significant differences.

Accountants’ tax preparation software is highly sophisticated. TurboTax, H&R Block, and other online programs boil down their interface to the basics so that it’s easy for the everyday user to figure out. However, that simplification can result in users missing out on important tax liability reduction opportunities.
CPAs are highly trained in using their specialized tax software.
A CPA knows how to work an automated system to your advantage by incorporating a holistic approach to tax planning.

Consider this example:

In 2021 you experienced more health issues than in previous years and you suspect your medical bills exceed 9% of your annual income. TurboTax alerts you to the option of itemizing medical expenses on your return — which become deductible once costs exceed 7.5% of your annual income. TurboTax will provide you with a list of obvious medical deductions like doctors bills and surgery costs.
You input that information but come up a little short. Without an experienced CPA’s guidance, you overlook several qualifying expenses like transportation costs to and from your medical appointments. As a result, you pay taxes on money that is actually tax deductible, significantly reducing your tax refund and compounding your financial burden.

It’s everyday situations like these that will cost you money by using a bargain online automated tax filing program instead of seeking the expertise of a trustworthy CPA firm like Steven Lissner & Company.

What Does it Take to Become a CPA in NJ?

There is a lot of education and training required to become a CPA in NJ. First, you must obtain a bachelor’s degree plus 30 additional semester hours from an accredited institution. A significant amount of credit hours is devoted specifically to accounting and business education. After graduation individuals must pass a 16-hour exam and then complete 1,750 hours of supervised work under a licensed CPA.

These rigorous requirements ensure that you will receive quality tax planning guidance from a CPA.

There is another advantage that goes beyond technical skill or financial aptitude — a good CPA also provides a human touch. When you hire Steven Lissner & Company, you’ll meet with a real person to discuss your financial situation. Our accountants take the time to thoroughly explain anything you find confusing. You won’t find any friendly conversations or detailed explanations in a bargain online tax filing program.

When your circumstances change, you need prompt answers to important questions. CPAs are available year-round to answer questions and guide your financial decisions. Whether you’re setting up a college fund or moving across state lines, CPAs deliver superior customer service.

Tax Preparation & Tax Planning with Steven Lissner & Company

At Steven Lissner & Company, our accountants deliver customized tax planning and preparation solutions for individuals, couples, and small businesses. With over 30 years of industry-leading experience, our CPAs know how to harness the power of tax automation without losing their human touch.

We excel where big-name automated services fall short because we believe a solid financial blueprint involves careful planning. Whereas programs like TurboTax provide only a snapshot of the last tax year, we help you craft a winning financial strategy that will ensure your fiscal success for years to come.

To experience the Steven Lissner & Company difference, contact our team of tax preparation advocates today! Your biggest tax refund yet awaits you!

Small Businesses May Benefit from Hiring a Certified Professional Accountant

March 3, 2022 by slissner_admin

When you ask an entrepreneur what are the most challenging aspects of operating your own business, chances are the answer will relate to managing their finances.

It could be sourcing funds, preparing tax documents, running payroll, or getting lost in the minutiae of bookkeeping. Each of these tasks could make or break your business.

That’s why it’s important to look beyond simple bookkeeping and enlist the expertise of a Certified Public Accountant (CPA) who specializes in small business accounting, like the team at Steven Lissner & Company. From tax planning and regulatory compliance to comprehensive financial consultation, our experts explain why successful businesses rely on professional accounting services.

CPAs Understand the Complete Business Growth Cycle

A CPA is a master of financial planning, equipped to steward your business through each milestone in its growth cycle. For example, consider how an experienced CPA can guide you through the following important moments:

The Launch Stage: A CPA can help determine the best business structure — LLC, Sole Proprietorship, S-Corp, and many more. They can also assist with setting up accounting software and instructing you on best bookkeeping practices.
The Growth Stage: CPAs are familiar with maximizing deductions, avoiding audits, and minimizing tax liability.
The Maturity Stage: CPAs monitor and comply with changes in tax law, navigate external audits, prevent internal fraud, and manage interactions with the IRS.
The Transformation Stage: When your business is ready for franchising, merging with a competitor, or if you want to divest yourself from the company, it’s important an experienced CPA oversees these types of complex financial changes to ensure your finances and taxes are managed properly.

Launch your Small Business with Accounting Services

Launching a new business requires a lot of paperwork for the state and federal governments.

The fiscal decisions you make when launching your business carry long-term consequences, starting with the business structure.

The structure you choose affects how you pay your taxes as well as your liability, filing obligations, and a cascading slew of state and federal regulations you must follow. To make matters worse, it’s not an easy thing to change.

That’s why it’s important to get the advice of a CPA right from the start of your business.

CPAs will review your fiscal goals to identify the business structure and financial opportunities that best suit your business’s needs. A CPA will also assist you in applying for state licenses and establishing your EIN, among other business-specific filings.

Creating a Reliable Recordkeeping System

Many companies utilize QuickBooks, which is the industry standard for delivering customized accounting solutions to simplify your day-to-day financial ops.

Leverage QuickBooks to monitor invoices, track payroll and other business expenses, digitize receipts, build custom reports, and more. Set up sophisticated interactions with third-party apps like Salesforce, Microsoft Excel, Shopify, and PayPal. Or take things a step further and request that your accountant provide actionable insights based on monthly, quarterly, or annual data. The possibilities are seemingly endless.

Moreover, we’ll let you in on a well-kept industry secret: Successful integration with QuickBooks can mark the end of the launch phase grind and signal the beginning of your company’s growth stage. Here’s why:

With a QuickBooks pro in your corner, you’ll be able to automate repetitive processes that would otherwise occupy your time and lower your productivity. Save yourself the frustration of trial and error that happens when you try to set up accounting software on your own. A CPA has the experience to set up and show you an efficient process.

Tax Planning Happens Year-Round for Business Owners

The tiny financial decisions you make throughout the year have BIG consequences when tax time rolls around. That’s why it’s important to plan year-round for tax season.

Enlisting a CPA is important because they will be aware of the complicated and changing tax codes that could impact your tax filings. A CPA can help you maximize your business deductions, minimize your payouts to the IRS, avoid costly filing errors, and prevent audits.

Examples of Tax Savings

After reviewing your business setup and financial records, your account makes the following recommendations:

By opening an HSA account for your employees and making regular contributions, you can lower your payroll tax liability and push your business into a lower tax bracket. Not to mention, overall employee satisfaction and productivity rise as a result.
The CPA notices your business uses accrual accounting and you’ve been overlooking the opportunity to write off “bad” debts from delinquent customer accounts. In addition to identifying these deductions, your CPA generates an automated report that fires any time a future account meets this criterion.

With the suggested tweaks in place, you easily save thousands of hard-earned tax dollars when filing your tax returns, paying for the cost of the CPA services, and then some.

Introducing Our Small Business Accounting Specialists

At Steven Lissner & Company, our team of CPAs has 30+ years of experience in navigating small companies through the complete business growth cycle. Whether you’re launching a new business enterprise, devising a tax plan that maximizes your deductions, or designing streamlined processes that simplify day-to-day accounting tasks, our friendly CPAs understand how to meet your company’s unique needs while keeping an eye on the prize: profitability.

When it comes to tax planning services in New Jersey, our accountants work year-round to secure your largest refund possible. Using sophisticated tools and continually reviewing tax law changes ensures that you never miss a profit-saving deduction.

Our small business accounting solutions free up your busy schedule. Instead of spending hours pouring over payroll or googling how-to instructions for excel, your repetitive processes will operate smoothly in the background.

When you’re looking for “top accountants near me“, Steven Lissner & Company should be your first call! Learn how you can jumpstart your productivity today while saving thousands on your end-of-year taxes. Contact one of our devoted tax specialists to schedule a consultation!

The No Contest Advantage of Using a CPA to File Your Taxes

January 3, 2022 by slissner_admin

No matter your industry, automation has become the buzzword of the moment. And, that’s especially true when it comes to processing your tax returns. However, as we’ll discuss shortly, the advantages of using a CPA to file your taxes still crush relying on automation every time. Here’s what the kings of tax automation aren’t telling you.

The Deceptive Nature of “Bargain” Tax Filing

Plug and chug tax preparation programs like TurboTax have been on the rise since the IRS introduced e-filing in the 1990s. The surface-level convenience of inputting a few lines of data into an automated system and filing the returned results online appeals to many consumers. But, adopting a do-it-yourself approach to filing your taxes comes with some apparent risks and concealed costs.

Or, as the saying goes, “all that glitters isn’t gold.”

Programs like H&R Block boast deluxe online self-prep services for as little as $49.99 per state tax return filed. If you’re a new grad with relatively few assets to your name, this price might actually confer savings.

But, life is often messy, and a one-size-fits-all approach to tax preparation usually fails to capture the uniqueness of most tax situations.

Consider some of the following—extremely common—situations in which it’s best to enlist the guidance of a trusted tax expert:

You’re self-employed, whether as the owner of a small business or as a subcontractor.
You’ve experienced a significant life event or sticky situation. These events include marriages, divorces, births, deaths, mergers, moves, buying or selling a home, retirement, etc.
You receive income from rental properties, foreign investments, cryptocurrency, stock trading, etc., or a bevy of less common income sources.

Is your head spinning yet?

Automated tax prep programs deliver precisely what they sell: tax preparation. But, unfortunately, when it comes to tax planning for the future, you’ll find yourself locked out in the cold.

In contrast, a CPA helps you identify tax savings and investment opportunities that will compound your capital across the span of many years. Simply put, this obvious advantage can translate into tens of thousands of dollars in lifetime savings. It can make the competition look pretty shabby in comparison.

Tax Planning, Planning, Planning…

Effective tax planning begins in the off-season.

You might be familiar with the obnoxious phrase, “Summer bodies are made in the winter.”

Similarly, effective tax planning for spring filing begins in the summer of the previous year. So if you genuinely wish to maximize your annual savings for next year, you need to consult with a CPA now.

Want to ensure that your hard-earned savings remain in your bank account instead of the government’s vaults? A skilled CPA will equip you with the investment strategies you need to outfox the IRS while staying on the up and up. From HSAs and FSAs to IRAs, your accountant knows the right combination of alphabet soup to craft a winning tax strategy that saves you money for years to come.

As your tax situation becomes more complex as the years tick by, you’ll learn that tiny financial decisions made in your youth carry BIG consequences. For example, sound financial decisions tend to dilate your long-term savings, whereas a lack of strategy can contribute to stagnant growth.

Here’s the bottom line: Automated tax prep programs help you evaluate situations that have already occurred. But, unfortunately, they’re inherently myopic as they focus only on the current tax year. As a result, they don’t provide you with recommendations for the future, and they can’t help you identify missed opportunities for savings.

Because these mistakes don’t often have immediate consequences, it will be years before you realize your error. But, in the meantime, that blunder translates to losing out on numerous avenues to save for your financial future. Simply put, unless you’re already a tax expert, these programs are a dead end.

You Deserve the Best of Both Worlds

Although we’ve been denouncing the pitfalls of online tax preparation, we’ll let you in on a little secret: Not all automation is bad.

In fact, most CPAs use automated tax preparation software to assist in calculating your returns. But, there are some notable differences here of which you should be made aware.

Firstly, your accountant’s tax preparation software is significantly more sophisticated than TurboTax. For example, your accountant pays somewhere between $1,000 and $6,000 per year to access these programs. Compared to the $50-$100 per year you pay to file via TurboTax or H&R block, the difference in expected outcomes is now becoming even more apparent.

Secondly, your CPA knows how to work an automated system to your advantage. Remember, the secret sauce of financial success lies in planning.

For example, did you start a small business last year or purchase an energy-efficient home? Did you acquire any foreign assets or find yourself the recipient of an unexpected inheritance? If so, then TurboTax can only provide you with a rudimentary snapshot of your financial situation.

Consider the following example:

2021 proves to be a particularly challenging year. By the end of the year, you suspect that you’ve spent more than 9% of your annual income on medical bills. TurboTax informs you that you should consider itemizing your medical expenses, which become deductible once your yearly healthcare costs exceed 7.5% of your annual income. TurboTax then rattles off a list of “stock” deductions—obvious items that you can deduct like doctor’s bills and surgeries.

But, after crunching the numbers, you’re coming up short. Without a CPA to guide your itemization, you overlook several qualifying expenses, including transportation costs related to accessing your appointments, fees to participate in a physician-prescribed weight-loss program, and periodic charges for your monthly acupuncture treatments.

Your tax automation program of choice didn’t alert you to these eligible deductions. So instead, you end up taking the standard deduction and miss out on subtracting $3,500 from your annual income. As a result, you pay taxes on this amount, significantly reducing your tax refund and compounding your financial burden.

You thought you were saving money by relying on automation, but instead, you’ve already lost out on more money than you intended to save.

This example illustrates why banking on automation to generate error-free tax returns can be so deceptive. A tax machine is only as skilled as its operator. Unless you’re a tax expert with years of specialized training under your belt, slipups are easy to make.

Although your mistake won’t lead to an audit, you will end up shelling out more money to Uncle Sam than you owe. And, you can believe that the IRS surely won’t alert you to your error.

CPAs Deliver Financial Know-How With a Human Touch

Becoming a CPA in New Jersey isn’t easy. First, you must obtain your bachelor’s degree (plus an additional 30 semester hours) from an accredited institution. Moreover, 24 of these 150 semester hours must include accounting credits. Additionally, to round out your financial education, you must devote another 24 semester hours to earning business credits.

As if that’s not daunting enough, you’ll also need to pass a 16-hour exam and complete 1,750 hours of supervised work under a licensed CPA.

Needless to say, you can’t blunder your way through these qualifications. A highly advanced level of financial aptitude and stick-to-itiveness is a prerequisite.

But, the advantages of using a CPA to file your taxes include more than just technical skills and business acumen.

A good CPA also provides a human touch. Unless you need technical support to access your account, the support team behind an automated tax preparation service typically can’t answer your question. Sure, they can reset your password and help you regain access to last year’s tax return. But, what about the things that matter? For example, if you’re going through a recent divorce, who will field your tax questions regarding the division of your financial assets? And, who will be available in the off-season and have the chops to advise you about acquiring rental properties?

When your circumstances change, you need prompt answers to your burning questions. CPAs are available year-round to answer your questions and guide your financial decisions. Whether you’re setting up a college fund or moving across state lines, CPAs deliver the superior customer service that you’ll come to rely on for all your financial needs.

The Tax Preparation & Planning Advantage You Deserve

At Steven Lissner & Co., our accountants deliver customized tax planning and preparation solutions for individuals, couples, and small businesses. With over 30 years of industry-leading experience, our CPAs know how to harness the power of tax automation without losing their human touch.

To experience the Steven Lissner difference, contact our team of tax preparation advocates today! Your biggest tax refund yet awaits you!

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