Monday, February 18, 2008

why I do my taxes twice

I always get a funny look when I tell people that I do my tax twice. Yes, I do my own tax. Yes, I pay an accountant to do it again. How much tax you pay is a function of how much you know about the tax system and rules. Consider that between state, local, federal, and sales taxes, I don't have any solid numbers, but we can guess at 25% to 30% of your money goes to the government to be spend on your behave.

Every year between Jan to March, I'm not working for myself or the company, I'm working for the government. Luckily for us, U.S. system of tax has incentive for certain type of activities. Just like a bonus from the company for doing the right thing. IRS gives some money back to you for doing the right thing. Unlike the company bonus, where the boss is responsible to determine how much you deserve. IRS is NOT responsible to give back your money, you have ask for it. In the extreme case, you have to prove what you ask for is true, through an audit. Filing your tax forms is just like writing your annual review. You want to show off your activities for the maximum impact because in tax rules what you do is as important as why and how you do it.

Back to the original question, why do I do my taxes twice? Because I want to learn from the professional without spending years on a degree. I just want to learn the important points that applies to my situation. I do the taxes my way as well as I can. Then I take it to the accountant so he can do it again as well as he can. The difference is where my knowledge was lacking. I'm not paying the accountant to do my taxes, I'm paying the accountant for his knowledge and training and take the time to teach me. With that knowledge, I can do better planning for the upcoming year.

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