Why use a tax preparer?

by Michael on February 24, 2009

in Taxes

There are a lot of good, very good, programs available to prepare one’s taxes. And there is a lot of good advice, free, on the internet. So why use a tax preparer?

Some of the advice, while on the whole, very good, could lead you into making a mistake that could be costly.

One example is it is commonly thought that if you do work for someone and you invoice them, and they don’t pay you, you can “write off” that invoice. This could be true … but only sometimes is that the case. Why?

Consider this … tax write offs are, in general, expenses you incur to promote your business or to conduct your business. If you, as most of us do, declare you income based on receipts and expenses based on what you spend, you can hardly “write off” something you have not received or spent. So, most of the time, the idea that you can “write off” an invoice not paid is not really true (although expenses you incurred doing the work you were never paid for may be a deduction).

Now if you declare income based on invoices (accrual method), then you could write this off, since it was viewed as income when you billed it, and yet it was never received and you’ve stopped trying to receive it.

This is one example of why having a tax preparer can benefit you.

{ 1 comment… read it below or add one }

Mike Harmon February 24, 2009 at 3:30 pm

I finally decided to write a comment on your blog. I just wanted to say good job. I really enjoy reading your posts.

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