How Much Can An Income Tax Accountant Save You?
April 17, 2023 Andrew AdolphAudits
Is tax season a stressful time for you or your family? An income tax accountant may be able to take the paperwork burden away and even save you money. If you want to forgo TurboTax this year and find out the extra money an income tax accountant can save you and how, read below.
What Is An Income Tax Accountant
Tax accountants specialize in many areas of tax. While most tax accountants can, of course, file a tax return, an income tax accountant is specifically trained to find areas where you’re leaving money on the table. While this is true for individuals, it is especially true for business owners. The best part is, if you own a business, you can even write off what you pay your income tax accountant as a business expense.
Here are three ways hiring a professional can save you money.
An Income Tax Accountant Knows What is Deductible
Taxes are tricky, and laws are always changing. However, it’s an income tax accountant’s job to keep up to date on these laws and provide you with information on what you can claim. For example, did you know that the rideshare tax laws have changed recently? That’s right, if you Uber part-time, there are special rules that only apply to you. What about what small business expenses you can deduct? Talking to a tax accountant and especially one who is a former CRA auditor like myself can help determine just how much you can claim without going overboard and drawing the CRA’s attention.
An Income Tax Accountant Can Help You Avoid Big Trouble
It used to be that you could sell your principal residence and the gain on the sale would be tax-exempt. While still the general rule, there are many things that can preclude you from qualifying for the full exemption. The penalties for not reporting the sale of your house, when it turns out you do owe some tax on the sale, are quite severe.
Nothing has changed, except that suddenly CRA is tracking all house sales. They are going back to 2016 and moving forward from there. Penalties on unreported real property transactions are huge. A properly certified CPA Income Tax accountant checks for house sales when doing your income tax return, saving you a lot of money on penalties if they apply.
A Tax Accountant Can Help You Avoid Penalties
Speaking of penalties, people misunderstand them. Most people think that if they cannot pay their tax bill, the best thing is to do nothing and wait to be caught or not.
This is the worst thing you can possibly do. You see, the penalty for not paying on time is currently 9%, which is costly but cheaper than your credit card.
But the penalty for not reporting your taxes payable on time is 5% of what tax owing, plus an additional 1% for each month it is outstanding, to a maximum 12 months.
That’s a 17% penalty for not filing because you couldn’t afford the bill. And that’s the cheap rate. Be late a second time, it’s 10% + 2% to a maximum 24%.
And of course, the 9% interest is accruing on top of all of this. Also, it is not deductible as a business expense.
It’s enough to destroy a business or person financially, and it’s why a properly trained Income Tax accountant can save you money.
- An income tax accountant specializes in finding areas for savings during tax season.
- Hiring a professional can help you claim deductions that you would otherwise miss, as well as keep track of the ever-changing tax laws.
- A tax accountant can save you money by avoiding penalties, avoiding large troubles such as selling a principal residence without reporting it, and keeping up to date on tax laws.
Have a tax issue in your life? Give us a call or book a free 30-minute consultation. If we can’t help, we might know who can. You can also check my blog for additional resources.Book Free Consultation
Andrew Adolph is a CPA and former CRA auditor with 25 Years of experience. He helps businesses to not par any more in sales taxs than the law says they must and acts as an advocate for you if you are being audited, so you can fous on your business.