Are You Overpaying Taxes If You Use Tax Preparation Software

Are You Overpaying Taxes If You Use Tax Preparation Software

Are you​ Overpaying Taxes If you​ Use Tax Preparation Software?
For many business owners the​ answer to​ this quandary is​ tax preparation software .​
Fill out a​ fairly simple interview,​ click print and out comes a​ completed return that will pass muster with the​ IRS .​
The answer to​ all your problems…or is​ it?
Can One Software Program Cover All Businesses?
Take a​ moment to​ consider the​ wide range of​ businesses that exist in​ the​ United States .​
Now cut that number down to​ those that can be categorized as​ Internet businesses .​
If you​ were asked to​ write a​ business plan to​ provide web design services to​ each of​ these services,​ how long would it​ be? It would be huge and completely useless because each business would have different needs .​
a​ Internet business selling flowers would have completely different needs from an​ online bank which would have different needs from a​ hosting company and so on​ .​
The only way you​ could create a​ practical plan for all Internet businesses would be to​ offer a​ collection of​ general services they could all use on​ their sites .​
Tax preparation software designers have the​ same problem.
There are over 15,​000 pages in​ the​ tax code and over 100,​000 pages of​ regulations interpreting those pages .​
Changes are made to​ the​ tax code ever year,​ and new regulations are issued constantly .​
If one were to​ create a​ list of​ questions for every tax deduction and credit detailed in​ those pages,​ the​ list of​ questions would be the​ size of​ a​ phone book! Yet,​ tax software programmers have somehow boiled it​ all down to​ a​ simple 30-minute interview process? Common sense should tell you​ that doesn’t make sense.
As practical matter,​ tax software programs are designed to​ make sure that you​ claim a​ general set of​ deductions that are applicable to​ businesses across all industries .​
Most programs try to​ mask this fact by asking you​ to​ identify your business before proceeding .​
For a​ lark,​ you​ might try selecting another industry and then running through the​ interview process .​
You will find that the​ interview process is​ modified a​ bit,​ but you​ are still being asked the​ same basic tax deduction questions.
If you​ are only claiming general business tax deductions,​ you​ are paying more than you​ should in​ taxes .​
Ask yourself if​ you​ have seen any of​ the​ following questions in​ a​ tax software program interview:
Q .​
Do you​ store business inventory in​ your house?
Hint: you​ may be able to​ claim hundreds or​ thousands of​ dollars in​ deductions.
Q .​
Did you​ start a​ pension plan for your employees?
Hint: you​ may be able to​ claim a​ tax credit for the​ next three years totaling $1,​500.
Q .​
Do you​ have a​ home-based business and a​ second office?
Hint: you​ may be able to​ deduct your commuting expenses each day .​
Yes,​ commuting expenses.
Q .​
Do you​ have business meetings at​ your home?
Hint: Did you​ charge your business for the​ space?
Q .​
Should you​ claim the​ standard mileage rate for your auto or​ the​ actual costs?
Hint: the​ standard mileage rate may not the​ best option.
Q .​
Did you​ modify your business location to​ comply with the​ Americans with Disabilities Act?
Hint: you​ may be able to​ claim a​ tax credit AND tax deduction for tax savings of​ $20,​000 or​ more.
Q .​
Did you​ refinance your home?
Hint: the​ points you​ paid on​ your original mortgage are fully deductible now,​ not over the​ length of​ the​ loan.
This represents only the​ tip of​ the​ iceberg of​ available credits and deductions available to​ you​ .​
Just one of​ these deductions could save you​ thousands of​ dollars in​ taxes .​
Yet,​ you​ are never going to​ see these questions raised in​ a​ tax software program interview .​
The tax code and regulations are simply too large to​ be incorporated into a​ usable software program.
Your business is​ unique .​
You face and overcome issues and problems that are unique to​ your size,​ financial situation and particular business needs .​
Don’t short change yourself by limiting your deductions by using tax software programs.

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