Should I Prepare My Own Taxes?
Its a question everyone asks themselves every year. It seems simple enough, especially with all the fancy software available. But the truth is, there is a lot more to doing your taxes than transferring a few numbers from some forms into the latest tax software.
How comfortable are you hitting the submit button after spending hours navigating the software, looking up questions on the IRS website, and then having to fix any errors and dealing with letters from the IRS?
Truth is, there is a lot more to doing your taxes than transferring a few numbers from some forms into the latest tax software.
If you mess up and decide to go to a tax professional for help, they need to do the return from scratch to verify everything and they will charge you as much to amend, if not more, than if you had gone to them in the first place. Its something to think about.
There are really only TWO REASONS to consider filing on your own:
You have the time and patience to deal with it.
You have a straightforward tax situation with no dependents, no investments other than retirement accounts, and no significant assets or charitable contributions.
If you own a business or are self-employed that adds another complex layer to preparing and filing your tax return.
Here are FIVE REASONS to hire a tax professional:
1. You don't have the time and patience to deal with it. If you feel that the significant time you'd need to devote to doing your taxes would be better spent elsewhere, you might want to outsource. It's probably more prudent than rushing through your filing and making a mistake.
2. You have a complicated tax situation with dependents, investments, or significant assets or charitable contributions, or you own a business. Nearly every financial transaction comes with some kind of tax consequence, and the more transactions you have, the more things you need to take into consideration. People who own businesses, freelance, or are self-employed in particular might want the help of a professional to iron out their atypical tax situations — deductions for home offices, business meals and travel, and vehicles are also audit red flags.
3. You're planning to itemize your deductions. Since President Donald Trump's 2017 tax law increased the standard deduction, fewer filers are itemizing deductions. But if you have major medical costs, a mortgage, or make large charitable donations (among other factors) you might save more money itemizing your deductions than taking the standard deduction. But itemizing can be tricky to navigate on your own, especially if it's your first time.
4. You've had a major life change in the last year. Did you get married? Buy a house? Have a baby? These all impact your tax filing, and, at least the first time you document them on your taxes, you might want someone to show you how best to do it.
5. You don't trust yourself to cover all of your bases. If the idea of entering numbers and talking about dependents and deductions makes you break out in a cold sweat, you might want to leave the preparation to a professional.
As always, should you have any questions or concerns regarding your tax situation please feel free to call us.