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Risks Involved In Self-Tax Preparation

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If you are considering doing your own taxes for the next tax season, then you aren't alone. According to IRS statistics, $27 million Americans opted to self-prepare their taxes during the previous tax season with the assistance of certain software programs. However, there are certain risks involved in preparing your own taxes, and you may want to pay for professional tax preparation services to prevent these risks.

Audit risk

When you pay for professional tax preparation services, the firm that files your taxes often offers audit protection as part of their services. So if the IRS decides to audit you for whatever reason, you will have backing from the agency. Of course, you could still suffer the consequences of any mistakes, but professional tax agencies stand behind their work. On the other hand, if you self-prepare your taxes, then you won't have this protection unless you pay a fee. Not all free software programs offer audit protection as an option, so if your tax return raises a red flag and the IRS starts investigating you, then you're on your own.  

Fraud risk

Identity thieves are becoming more and more clever, and their tactics are evolving right along with the security measures intended to prevent such crimes from occurring. When you file your own taxes, it is important that you ensure that you're practicing online safety. By opting to transmit sensitive information via a public and/or unsecured internet connection, you increase the chances of criminals obtaining your social security number and other private information. This stolen information can be used to steal your identity. 

While most identity theft-related crimes during tax season involve criminals filing fake tax returns in unsuspecting victims' names, due to the high theft activity during tax season, it's better to take all necessary precautions. If you absolutely must file your own taxes, then it's imperative that you use a private, secure internet connection to prevent the risk of fraud.

Cost risk

If you feel you're saving money by self-filing, then you should be aware that this isn't necessarily true. You could prepare your taxes and make even a minute mistake that could cost you hundreds or even thousands of dollars. Paying a small one-time fee is often well worth the peace of mind you will experience knowing your taxes were done properly.

Preparing your own taxes may sound simple, especially since such a large amount of Americans do their own. Regardless of how easy it appears, the likelihood of your making a mistake is high, and mistakes could come with serious undesirable consequences. Unless you have undergone professional tax preparation courses, you should leave such a job to professionals. For more information about tax preparation, contact a professional like Groskreutz, Schmidt, Abraham, Eshleman & Gerretse CPA.