Let’s start with a disclaimer of sorts: While preparing taxes is part of our practice, I don’t necessarily think that people can’t ever do their own taxes. But for many, it’s a task better left to professionals. So for those who have been using Turbo Tax or the like to DIY their annual tax prep and filing, when should a switch be made to hand this process over to an accountant or tax preparer?
When you don’t have time.
It’s a relatively obvious place to begin, but tax preparation is not an easy or quick task for most of us. According to the IRS, the average taxpayer spends 13 hours preparing their tax return. Thirteen hours! From determining whether you have all of the documentation needed to including all info needed without errors into their proper spaces and schedules, it can often take days to push through the completion of your annual tax return and still handle other life duties. If it’s not the best use of your time, give it to someone for whom it is their job to take care of it.
When you’re not sure about the tax law.
Many people think that self-service tax preparation automatically covers you if errors are made, but that’s not true. The software depends on the information you input, and additional coverage like audit assistance is generally an additional cost for the taxpayer. If you make an error, or are missing information on items you should have claimed or deducted, the responsibility falls on you to find out how to correct and resubmit the necessary information. The reality is that most taxpayers are only mildly aware of how tax changes affect their particular circumstances, and would benefit by having an expert not only prepare the return, but also act as a resource to educate you on what might differ from prior years.
When your taxes are complicated.
Do you even know if your taxes are complicated? Even items that seem routine or simple can get complex when you consider life status changes, freelancing or owning your own business, or rental properties. If you are not confident all bases are covered, or if you have updates to your life that may require additional reporting and forms, it could be in your best interest to hire someone. It may be your first time seeing these situations, but it shouldn’t be your tax preparer’s. Having someone who knows how to handle them reduces the chances of mistakes, which could result in costly penalties or fines. In addition, you could be missing out on credit or deductions that you are entitled to, which would ultimately leave money to you that would otherwise be erroneously owed to the IRS,
For many taxpayers, the peace of mind in knowing that their returns were accurately prepared is worth the cost of paying a professional. Since you can be sure that you are in compliance with tax laws, you can rest easy without the anxiety or fear of an audit. And even if the IRS reviews your return, you know that you have an expert on your side to help with any requests.
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DISCLAIMER: I am an accountant, not your accountant. Please speak with a professional about your specific accounting and tax needs before putting any of the aforementioned tips into practice.