The US government’s tax code is so complicated that it takes an average of 8 hours to file your taxes. If you are in the top 1% of income earners, this increases to 257 hours! For many Americans, trying to understand their taxes can be a daunting task.
There are many taxes that need to be filed and paid, including federal income taxes, state income taxes, local property taxes, and sales tax. This means that it can be a challenge to keep track of all those different types of payments and deductions and figure out what you owe or if you’re getting back money from the government! The good news is there are several ways you can make the process less painful and easier for yourself like hiring tax return experts.
Here are some reasons that make tax preparation in the US difficult:
1. There are several types of taxes, and they all need to be filed separately
To complicate matters, there are many different kinds of tax returns that you might have to file. The two most common ones are the 1040EZ and the 1040 form. You might also have to file a state or local income tax return depending on where you live. Local property taxes, sales tax, and other miscellaneous forms might also apply to you depending on your specific situation.
2. The US tax code is very complicated
The US government’s tax code has grown incredibly complex over the years, with 70,000+ pages of detailed rules about what deductions are applicable to you and how you should be taxed. This can make filing your taxes very complicated and time-consuming, especially if you’re doing it on your own without the help of tax professionals.
3. Keeping track of records throughout the year is difficult
It’s easy for small things to slip through the cracks, like forgetting to keep receipts or losing account statements that you need to file your taxes. This can make it difficult for you to accurately report your income and the deductions that you are eligible for, leading to an audit or worse…
4. There is a lot of gray area in the US tax code
This creates confusion when you have to determine which deductions apply to your personal situation. If you don’t know what you’re doing, it can also be easy to miscalculate how much you owe the government or think that you’ll get a huge refund when in reality you will have to pay.
5. Income taxes are due several times a year
Income tax is due four times throughout the year on April 15, June 15, September 15, and January 15. This can make it difficult to predict how much you will owe in total for the entire year. If it turns out that you have overpaid your estimated income taxes to Uncle Sam throughout the year, you will receive a refund for the amount that you overpaid. On the other hand, if you underpay your taxes throughout the year and owe money to the IRS, you will have to pay interest on top of what you already owe.
Tax preparation in the US is a difficult process; the IRS is well aware that to some degree, they need to simplify the process in order for people and businesses to be able to comply with filing their taxes without too much difficulty. If you don’t want any surprises, then it might be time to consider hiring an accountant or at least get help from one of our experts.