Should You Do Taxes Yourself?
It’s that time of year when you need to file your taxes. With thousands of pages of tax code, the entire process can be difficult to understand. However, you can do your taxes yourself with any one of the excellent tax software available at your local office supply store.
Benefits Of Doing Taxes Yourself?
You have the potential of saving hundreds, if not thousands of dollars doing taxes yourself. Most tax preparers charge anywhere from $100 and up for even the most simple tax returns. There is also the risk that the tax preparer will miss something or make a mistake, which can cost your even more in missed tax deductions, penalties and interest. On the other hand, for a simple tax return, you can do that online free at the IRS website, or use one of the several free online tax filing programs that are partnered with the IRS and are members of the Free File Alliance. For more complicated returns, many of the FFA partners proprietary online software can handle those as well.
Disadvantages Of Doing Taxes Yourself?
Doing taxes yourself has risks too. If you are not familiar with doing taxes or your tax situation is complicated, you are more likely to make more mistakes than a professional preparer would. In addition, professional preparers will usually represent you in case you get questions about your return from the IRS, or worse – a tax audit.
Is Paying Someone To Do Your Tax An Assurance?
No, you can still get audited regardless of who prepared and submitted your taxes for you. That is why if you pay someone to do your taxes, always use a certified public accountant, or CPAs. They are certified by the state and should posses the knowledge, skill, and experience to prepare and defend your tax return. Anyone other than a CPA will not be qualified to defend your tax return in case of an audit.
When Should You Hire Someone?
If you have investments, real estate transactions, run a business with employees, or have special circumstances and entitlements, you might want to hire someone to do your taxes for you. In these instances, make your whoever you hire is a CPA and specializes in doing the tax returns that match your tax situation. Not all CPAs are the same. Having a CPA license does not necessarily mean they have the tax expertise to help you with your particular tax situation. Be sure to ask the CPA what kind of experience they have and what they specialize in before hiring them. This is especially important when you are dealing with large sums of income and expenses when even a simple mistake can mean thousands of dollars in missed tax deductions or penalties and fines.
Filing taxes yourself can be simple, save you hundreds of dollars, and you can prepare them directly with the IRS or with any one of several FFA IRS partners. If your tax situation is more complicated by investments or running a business, you should hire a Certified Public Accountant who specializes in those particular areas. Paying a CPA to prepare your taxes does not eliminate the risk of getting audited, however it does greatly reduce chances of errors and they can defend you in case of an audit. Just be sure to weigh cost of hiring a CPA against your estimated tax liability.