Tuesday, January 13, 2009

Would you pass the tax quiz?

An annual survey conducted by The Tax Institute at H&R Block finds a majority of taxpayers can’t answer even the most basic tax questions correctly according to their press release. Accordingly to Amy McAnarney, Executive Director of the institute, “Americans are failing Taxes 101.” The annual survey asks 1,000 people tax related questions.

Some of the findings:

70 percent said they were not aware of recent legislative changes that could affect their return despite the fact that changes could affect parents, first-time home buyers, long-time homeowners, military personnel, retirees, taxpayers impacted by Alternative Minimum Tax and more.

Nearly 60 percent didn’t know whether a deduction or tax credit trimmed more off the bottom line. (The correct answer is a tax credit.)

78 percent didn’t know what tax bracket they were in. (Knowing your marginal tax rate, including state and local taxes, can be very important when making financial decisions).

You can click through to their press release if you want more of their findings.

I think my key take away is that most Americans need help. Yes, you can do it yourself but are you really prepared to sort through and understand all the complexities?

It is my belief that having a CPA prepare your taxes and assist you with planning is a bit like using a slugger in baseball - They may not get a hit every time but occasionally, they hit it out of the park and that's why you pay them.

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