Whether you decide to pay someone to do your taxes depends on your tolerance for crunching numbers and having at least a basic understanding of tax rules. If calculations are your thing, you’ll probably be fine on your own. Though you might want to keep a tax professional’s number on hand because you’ll probably have at least a few questions as you go along. Otherwise, you might want to pay someone to deal with your return.
How do you know which is better? Here’s the breakdown of both options to help you decide which is right for you.
If you are an expert and choose to do your taxes the old-fashioned way with pen and paper, it won’t cost you. Most people use DIY tax preparation software through companies with low fees, which offer tax support advice. Utilizing the software is like having a virtual accountant sitting by your elbow as you work along.
Most reputable programs will tell you what would happen if you contributed to an IRA, if you gave more money to charity, if you earned more money, or if you lost money in the stock market. You can see how entering numbers into different parts of the software can make an impact on tax calculations and tax planning.
Preparing your own returns is time consuming and requires a great deal of planning and patience. Of course, the amount of time you’ll spend will depend on the complexity of your financial situation and your experience with self-filing.
Beware of the new changes that have become of the recent years. The IRS decided to “streamline” tax returns to conform to new law. These generally require multiple attachments, which may be reason why you would want to consult a professional.
Hiring a Professional
The majority of Americans opt to hire a tax professional to prepare their tax returns because they want to be sure that it’s done right, and don’t want to hear from the IRS later. It is important to find a tax professional with a level of experience and specialization suitable for your needs. Some accountants are general practitioners, while others specialize in areas such as helping Americans who live overseas or self-employed individuals.
You can expect prices to be higher in regions with higher costs of living or if your tax return is particularly complex. Some individuals may qualify for free tax preparation services through local non-profits.
Those who are at least 60 years of age can find free tax preparation services through Tax Counseling for the Elderly and the AARP Foundation’s Tax-Aide programs.
Remember, even if you hire a professional, you must begin gathering and organizing all your tax related documentation as soon as possible. Generally, the decision will come down to cost, so creating a pros and cons list detailing your expenses is advised.