One of the most common questions I’m frequently asked is, “should I do my own taxes this year?”
It’s a new tax season and many of you all will be receiving your W-2s soon. The next step is to choose how you want to file your taxes this year.
Should you use a tax software or hire a tax pro?
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Why should I pay for the services of a Tax Professional or Accountant?
Let’s say you need some quick legal advice and decide to use a web service like Legal.com. Most of the advice from their website would be free because it is general information.
Now if you need expert legal specific to your personal needs, you would hire an attorney who would give you professional legal advice and cost for his or her professional expertise.
Or let’s say, you were looking for free general medical advice from a site like WebMD.com.
The information provided would be general information not specific to your individual needs.
If you needed specific attention, you’d need to go to a professional like a physician or a specialist to get to the root cause of your problem.
Both examples show how complex situations require expert advice and guidance. These examples are why you should thing about hiring a tax advisor.
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Tax Filing Software
Online tax software can be simplistic and doesn’t always apply to your individual needs that may change from year to year.
Don’t get me wrong, online tax software can be an excellent choice for a SIMPLE tax return, but not necessarily the best choice for a more detailed tax return.
Think of yourself as a business, and as a business you make income and incur expenses.
Don’t let the file for free advertisements fool you.
Filing for free usually mean that you have a basic tax return with minimal or no deductions.
You’ll notice that with online software your fees increase as your deductions increase.
Also, the confusing question increase to a point where you start questioning yourself and the legitimacy of your return.
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Click HERE for the complete tax preparation check list needed for filing your taxes.
Common concerns you may have before hiring Tax Advisor or Accountant:
- I don’t like sharing my financial info with anyone
- It’s hard for me to trust anyone
- I like being in control of my taxes
- An accountant may not keep my information private
A great accountant or tax professional will help alleviate all of those fears you may have.
If you still are not sure if your situation calls for a tax pro, then review a few common life events below.
8 Reasons You Why You Should Hire an Accountant or Tax Advisor Instead of Doing Your Own Taxes
- Own a small business
- Have rental property
- Want to start estate planning
- You are subject to the alternative minimum tax (AMT)
- Experienced a big life change (new baby, married, divorce, retiring, etc.)
- You don’t know if you should accelerate or postpone your income
- You have employee stock options
- Need to make quarterly tax payments
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Why does a Tax Professional cost more than using a Tax Software to do your own taxes?
Most of us have important deductions and credits that we earned throughout the year. The salary you make is not money you keep. We incur expenses on a day by day bases.
Keep in mind that there’s a lot of gray area when it comes to IRS law.
There are lots of deductions and credits that you may or may not qualify for as the qualification criteria changes year to year that a tax pro can help you with.
A tax advisor or CPA (Certified Public Accountant) are experts in their field and will know how to deal with your specific situation, ensuring that you come out on the best end for your financial situation related to taxes.
It cost on average $350 to have a more detailed tax return prepared by and accountant or tax professional.
Compare that to the $75 (average) spent on an online software such as Jackson Hewitt.
What does the extra $275+ give you with a Tax Advisor or Accountant?
Filing with a qualified accountant or tax advisor will give you peace of mind knowing that you’ve receive all the deductions and credits you qualify for.
You’ll also be updated on new tax laws that may affect your financial situation.
So, why put yourself through the trouble of spending hours of answering confusion tax questions from an online tax software?
Remember: Keep track of your expenses and income on a spreadsheet or bookkeeping program such as FreshBooks.
These are some questions you can avoid asking yourself later by hiring a tax professional:
- Did I give all my hard earn money to the government?
- Should I have claimed this credit or deduction?
- Will I have to pay it back if I get audited?
Key Questions to Ask When Looking for a Tax Advisor:
- Do they provide clients with an honest, secure, educational, and efficient tax preparation experience?
- Are they a respectable tax service?
- Is the company accessible, accurate, affordable, convenient, efficient, fast, knowledgeable, reliable?
- Is the Accountant or tax advisor easy to get a hold of
- Are the tax advisors competent with tax advice, fast and accurate?
- Do they provide you tools for making informed financial decisions?
- Will they ensure that the information received and transmitted is secure at all times?
So, should I do my own taxes?
It doesn’t take a genius to do your tax return, but in some circumstances it does take a qualified tax professional.
After all, you don’t miss out on your hard earned deductions.
I hope this article helped you gain some control of your tax plan this year. Remember not to stress out. Don’t forget to check out Tax Forms page for any additional online tax checklists and forms you may need this year.
If you enjoyed this article, then you’ll love these:
- Best Rules for Claiming a Dependent on Your Tax Return
- When and How to Claim Tips on Your Tax Return
- Do I Need to File a Tax Return?
- How to Choose the Best Filing Status
- Top 12 Things You Must Know About the New Tax Law
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Until the next money adventure, take care!
Disclaimer Statement: All data and information provided on this site is for informational purposes only. The Handy Tax Guy makes no absolute representation of the correctness, mistakes, omissions, delays, appropriateness, or legitimacy of any information on this site. **Note: Each client circumstance will vary on a case-by-case basis**
(Original Article Date: January 21, 2019/Updated March 7, 2021)