If you are having trouble doing your taxes, you are not alone. Every year, Americans turn to online tax services or in-person tax advisers to help them complete their taxes. If you feel like your taxes are too confusing to complete on your own, do not worry. It is not your fault that you have trouble doing your taxes; instead, it is because taxes are too complicated.
1. Changing Rules
One reason why taxes are too complicated has to do with ever-changing tax rules. What worked last year often does not work this year. For example: in 2013, taxpayers who installed energy-efficient home improvement items, such as heaters and air conditioners, were entitled to a tax credit. In 2014, that tax credit went away. People who try to claim the tax credit on their 2014 taxes run the risk of an audit.
Doing your taxes on your own is difficult if you are not familiar with all of the recent tax changes. Some of these tax changes are designed to benefit you, such as the 2014 simplified home office deduction. Missing out on these deductions because you are unaware they exist becomes extremely frustrating.
2. Different Employment Statuses
Taxes also become extremely complicated if you are self-employed or are combining a full-time job with part-time freelance work. Working through W2s, 1099s, Schedule Cs, estimated taxes and all of the other forms involved in combining full-time work with self-employment gets confusing very quickly.
Doing your taxes for a freelance job or self-employed venture is also frustrating because it is difficult to determine which expenses count as business deductions. This is where working with a CPA becomes very useful. Making the wrong choices runs the risk of an audit, and not knowing which expenses are eligible to deduct means you might pay more in taxes than is required.
3. Credits and Deductions
The third reason why taxes are so difficult is because there are so many individual items that might count as tax credits or deductions. Moving to a new city, for example, is a tax deduction if it fulfills a specific set of requirements. Tuition and educational expenses are also sometimes eligible for tax credits. There are many deductions and credits like these expenses.
Doing your taxes means taking the time to remember every expense you incurred in the past year and figuring out which of these expenses are eligible for deductions or credits. It also means wondering if you forgot important expenses or if you accidentally listed a deduction that does not fulfill the IRS requirements. This is possibly the biggest reason why taxes are so complicated and often stressful.
These three reasons prove that doing your taxes is complicated and often frustrating. They also explain why so many people seek out help from professional tax advisers before completing their taxes. Often, working with a tax professional is the best choice.
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