Should You Prepare Your Own Taxes?
Tue, Jan 5, 2010
I’ve wrestled with whether or not to prepare my own taxes in the past quite a bit. While I felt competent to manage my finances from budgeting to paying my own home taxes I’ve always had a little bit of concern for preparing my own tax return.
Why? I’m not a tax professional! Primarily, I was afraid I was going to make a mistake somewhere along the way, get audited and have to pay a penalty. I suppose the other reason was the convenience in taking my paperwork to a professional and trusting they would take care of everything for me. All I had to do was collect my paperwork, decide what day I would visit the tax professional and bingo, my taxes were done!
But a few years ago I made the decision to do my own taxes. Honestly, it was sort of on a whim when I decided to sign up for the online version of Turbo Tax. I found the system so easy to use, with it prompting me for information and asking questions. I haven’t turned back for the last few years.
So, should you prepare your own taxes? How do you decide? Asking yourself 3 simple questions may help you determine whether or not this is the right approach for you.
Do you have the time?
Getting organized and preparing your own taxes does take some time. You need to collect all of the tax documents required for filing and then block off some time to enter the information into a software program. Once you’ve done this a few times you’ll know how to organize your information and have everything you need at your finger tips, but it will require a time investment either way.
Do you want to pay?
Still leaning towards using a tax professional? With any professional service you’re going to pay. The price range is wide with tax preparation. In the past, I’ve paid around $100 for a simple return at H&R Block, but some returns can get quite complicated and you’ll definitely pay for the expertise. Note: your tax preparation fees may be eligible for deduction the next time you file if you itemize your deductions.
Do you have a simple return?
An important question is to ask yourself if you have a simple return. How do you know? Basically, a simple return may be seen as someone who is taking the standard deduction, doesn’t itemize and their income is from one employer and interest from just a few places. But, this is very simple. I think a simple return could also be someone who itemizes their deductions, but the other criteria may still hold true. Ultimately, the decision is yours, but it might not hurt to dive into a software program to find out how straight forward the filing is for you.
Final advice
With that being said, if you’re making the move to doing your own taxes this year for the first time you might consider having them double checked by a CPA or from a company such as H&R Block. You can find a Dave Ramsey endorse tax professional in your area.
This may be a good idea if you’re feeling any anxiety at all over your tax preparation and also find that you owe or expect to receive a significant refund. Turbo Tax, in particular, does a lot in the way to help you avoid making mistakes. However, remember the responsibility to file accurately is still yours.
How do you feel about preparing your own taxes this year?
Related Posts:
Tags: Taxes
If you’re going to use H&R Block, you’d probably do just as well using Turbo Tax. The question format they use helps you make sure you don’t miss anything – you just have to read carefully.
That said, there are plenty of people who just hate taxes. If so, then use a paid preparer. What you pay them will be well worth the headache you save from not doing it yourself.
Paul Williams´s last blog ..New Covenant Giving Guidelines for Christians
Paul, great point. I have found Turbo Tax to work great for my situation.
I have used turbo tax in the past, but considering my wife is a self employed nanny and we adopted in 2009 I just filled out the Dave Ramsey ELP form for a tax service professional. I’ll let you know how it goes this year.
Eric, this a great example of a special circumstance and using good judgement on when you need to seek the services of a professional. Please do let me know how everything turns out for you.
I’m probably going to be getting with an accountant this year because of my online income that I’ve made this year. I want to make sure I get all the deductions possible -and that I’m not missing anything. We’ll see how it goes – i still have to make one estimated tax payment next week. *sigh. I hate taxes.
Peter´s last blog ..Blueprint For How To Make Money With A Blog: Creating Content, Optimizing SEO And Promoting Your Site
Pete, that makes perfect sense and another example of a special situation. Personally, I can’t think of a reason I would ever not use a CPA to file taxes for a business. It’s probably well worth the money to make sure you’re getting all possible deductions (as you say) and filing correctly. And since you hate taxes, it makes even more sense to have someone else do the filing for you!
I would strongly recommend for anyone to use a CPA to prepare their taxes. I am a CFP and soon to hopefully pass the CPA exam myself and have even worked for a couple years as a tax preparer when I was younger and even I definitely use a CPA to do all of my taxes. Just last year my CPA thought of at least one thing that saved me some money that I never even thought of! – Joel
Credit Card Chaser´s last blog ..Dave Ramsey & Credit Cards: I Love Ya Dave but You are Dead Wrong
Credit Card Chaser, sounds like you’re recommending people not go the Turbo Tax route for filing, but to use a CPA. I still think Turbo Tax does a good job of finding deductions, but one can’t deny having a CPA, someone who is a professional in this area, certainly helps insure you’re getting all the right deductions for your situation.
I have used http://www.taxactonline.com/
for the last two years. works very well. not too hard. If I can do it anyone can. I do not itemize. If your situation is really complicated, then doing it yourself may be more difficult. But the program just asks you questions and you fill in the blanks. Still pretty easy I thought.
Thanks for sharing the link for readers to check out. So, as you say, some basic situations may very well make sense for the folks who want to file themselves. Other more complicated situations may require the help of a professional.