If, however, you own investments in taxable accounts, things get trickier.ĭividends are taxable, so you’ll need to gather any tax forms your brokerage sends to the IRS each winter. The IRS allows the money to grow, with compounding interest, tax-free, and those accounts add little complexity to your taxes until you reach your 70s and must begin taking the money out. Most taxpayers who own stocks and bonds have the bulk of their holdings in tax-advantaged accounts, such as 401(k) plans, 403(b) plans or Individual Retirement Accounts. “A CPA can make sure you’ve performed the bookkeeping accurately,” Walker says.
#Cost for turbotax 2017 online software#
TurboTax sells a version of its software designed for business owners, but for many taxpayers, being self-employed is the single most compelling reason to hire a tax professional, says April Walker, lead manager of taxation at the Association of International Certified Public Accountants. Would it be better to depreciate your business vehicle or claim the standard mileage deduction for business travel? Should you claim a home-office deduction? What about using a SEP-IRA or another tax-advantaged retirement account for self-employed workers? While a full-time employee has almost no wiggle room in terms of deducting work-related expenses, a self-employed worker faces a dizzying array of tax deduction possibilities and pitfalls.
Self-employed workers have their income reported via a Form 1099 rather than a W-2, and independent contractors are responsible for making estimated tax payments once a quarter. With the sharing economy taking off, more and more people are driving for Uber and Lyft, renting rooms through Airbnb, and delivering dinner via Uber Eats and GrubHub. were self-employed in 2016, and that number is projected to grow to 10.3 million by 2026. If you’re older than 70 and have an Individual Retirement Account, you’ll need to start preparing for annual required minimum distributions.Ī life event doesn’t necessarily need to send you straight to your CPA’s office, but it can raise the level of tax preparation difficulty and the chances that you’ll want to hire a professional.Īccording to the Bureau of Labor Statistics (BLS), approximately 9.6 million workers in the U.S. In most cases, you’ll have to pay taxes on the forgiven amount, because the IRS considers it as income. If you have a mortgage forgiven through a short sale, or if you have student debt retired after negotiating a financial-hardship reduction, you might receive an IRS Form 1099. If you got an inheritance from a late family member’s trust, you might not receive the required Form K-1 until months after the April 15 deadline, which means filing for an extension. Financial windfalls and shortfalls can also dramatically change your tax outlook. A divorce or a major health problem can wreak havoc on a once-simple tax picture. When life happens, all sorts of tax consequences can ensue. For most taxpayers, reality lies somewhere in between the complexity of multiple income streams and investments and the typically streamlined finances of a salary earner. If, on the other hand, you’re a full-time employee who collects a solid salary, receives a W-2 every year and owns no investments outside of your tax-sheltered 401(k) or 403(b) retirement plan, tax software may be sufficient for your needs. If you own a business, pay employees, invest in the stock market and own multiple pieces of real estate, a CPA will likely make things easier for you.
#Cost for turbotax 2017 online professional#
For millions of Americans, tax season demands a big decision: Is it wiser to pay a professional to prepare your taxes, or can you make do with tax-prep software such as TurboTax or the IRS Free File Program? While for some taxpayers it may be as simple as filing a 1040-EZ and getting a nice little refund, for others, the season evokes a certain amount of anxiety and confusion. Just as soon as New Year’s celebrations wind down, American taxpayers begin their annual scramble to track down receipts, W2 forms and 1099 forms in anticipation of the annual April 15 income tax filing deadline.
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