Reasons You Need a Tax Attorney

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Perhaps it's time to file your annual returns, or maybe you've just started a new business, purchased property, or become self-employed.

If you don't fully understand your tax responsibilities and the definitions and terms still confuse you, then it might be wise to enlist a professional's help. 

The slightest mistake could cost you more than just extra penalties or interest, while improper record-keeping could even trigger an expensive and cumbersome audit. 

If you're still deciding whether you need a tax attorney, here are five reasons why one could be useful.

The Time Factor

State and Federal tax laws are voluminous and complex. You could quickly become lost amongst the countless pages of IRS code and regulations. This could present problems when you're facing a deadline.

Besides saving you precious time, an attorney will help you sift through the legal fine print, explain what you need to do, how, and when - to remain compliant.

Additionally, record-keeping practices aren't things you can learn on the job. Even a freelancer has tax obligations, so having a system in place from day one is crucial.

Voluntary Disclosures

Perhaps you didn't realize how far behind your returns are. It happens more often than you think. Inheriting an estate, business, or property could also bring about tax implications you weren't initially aware of.

However, the authorities don't usually consider a lack of knowledge alone as a valid reason, and the IRS Voluntary Disclosure Program requirements are stringent and time-sensitive. Unreported income, investments, or assets can all be voluntarily disclosed to avoid facing serious consequences.   

That's why it's crucial to understand the processes and differences between tax evasion, unpaid taxes, late, and unfiled taxes.

You could try this service and get expert advice if you're thinking about making a voluntary disclosure.

Deductions & Tax Benefits

Similarly, you might not realize that your business is eligible for certain deductions or benefits. Things like new equipment, travel, membership fees, repairs, and even parking costs could all be offset against your income.

However, these incentives come with specific requirements, so you'll need to know what they are and how to use them efficiently. 

A specialist attorney can help you find the best ways to take advantage of these benefits and optimize your deductions.

Employee Taxes

The tax system in the U.S. is progressive, meaning that the more you earn, the higher up the scale you move. Your tax bracket depends on factors like your income and whether you're filing jointly with your married partner, single, or widowed.

There are also credits and deductions available. However, if you're not well-versed in the specifics, you could be paying more than you should.

Conversely, while sole proprietors aren't required to register with the state, this doesn't automatically exclude them from tax. To remain compliant, you'll need to know what the IRS expects of you.

State Obligations

It's not uncommon for a business to conduct sales outside of its resident state. However, the calculations become tricky because certain activities trigger additional obligations. 

Managing your local responsibilities while making sure you're complying with other state laws is a balancing act that requires a well-rounded understanding.

Moreover, when you relocate to a different state, moving and rental expenses, investments, and even retirement income could all have significant tax implications.

The Bottom Line

Paying taxes is crucial, but it's often a time-consuming process. To make a voluntary disclosure or take advantage of deductions and benefits, you might need a tax attorney's help.

Similarly, employee tax and state obligations cover a wide range of factors. A professional equipped with the legal know-how can guide you in the right direction to ensure your compliance.