Do Your Taxes Yourself or Hire a Pro?

This year there has been a big push to use a smartphone or an app to do your taxes, but quite a few people will actually need to hire an accountant. That’s fine, you just need to be honest with whoever you hire.

Why would you hire a local professional tax service to do your taxes for you when you can do the job on your own?

How Complicated are They?

If you’re filing single and you happen to live in an apartment with your only investment being your 401(k), doing your taxes on your own should be fine. Even if your situation is a bit more complex like if you get married or have a child and itemize deductions, most tax software can walk you through these things.

However, if you’re a business owner with an EIN tax id, either as a side hustle or as your main job, if you inherit property or buy a home, it’s going to behoove you to get help from a professional.

While the more comprehensive software for taxes can handle complex situations, it still can’t talk to you about your future plans that might have an effect on your taxes. Tax professionals can tell you what might happen if you decide to donate instead of selling the stock left to you by your Uncle Henry.

How Much Time Do You Have?

What it costs to get your taxes done is worth considering, but don’t forget that your time has value too.

It might take an individual a couple of days to complete their Form 1040. How long it takes to complete this includes the time it takes to gather accounting records, planning and filling out the return and filing it.

If you use a professional tax preparer, you’ll still need to commit a bit of time toward gathering your financial info, but once you’ve got that done, you can spend your time on other things.

Are You Prepared, Able and Willing to Deal with the IRS?

When you sign your tax return, it is essentially your agreement that all of the information on the return is your responsibility. When you prepare your taxes on your own, that means that if the IRS has any sort of questions for you, they’ll come to you as opposed to the preparer that you could have hired to do your taxes. The thing is, sometimes, this even happens years after the original filing date.

That said, a tax pro can be a point person. Any questions the IRS might have will be directed toward whoever did your taxes. To take it a step further, you can even give power of attorney to certain types of tax preparers so that they can be your representative before the IRS–though you’ll obviously want to consult with a lawyer and your family before you take this step.

There is tax software out there that’s cheap and even free. However, is it worth the cost of your time and any mistakes that might be made when you use them to file your taxes?

 

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