When Does Doing Your Own Taxes Make Sense?
Should you do your own taxes? That all depends, of course, on your personal situation -- both in terms of how complicated your taxes are, how much you know about the tax code, and how comfortable you are with numbers. Doing your own taxes can save you money and help you avoid scams, and with the latest technological innovations, it's easier than ever.
The tax code is a massively complex set of rules and regulations, so in many cases, hiring a CPA or a professional tax preparer to do your taxes for you makes sense. But if you’re good with numbers and finance, there’s no reason you can’t venture into the “tax waters” and file your tax return on your own. The DIY tax approach offers several distinct advantages, which we take a look at today:
You'll Save Money
This one is simple math. You’ll have to pay a professional to file your taxes for you, but you don’t have to pay yourself a cent if you decide to tackle them at home. If your personal finance or small business expenditures and sources of revenue aren't amazingly complicated, why not handle your taxes on your own? If you use the IRS website, you won’t even have to pay to file.
Perhaps the greatest advantage of doing your own taxes—assuming you really do know your math and some basic tax law—is that you can (hopefully) trust that you’ll never leave yourself in the lurch (or forget to return your own calls) come tax time. The same can't be said for someone you don't know.
You Can Avoid Shysters and Tax Scams
Sadly, the world is full of people who are more than happy to rob you. You won’t necessarily meet all of these nefarious folks in a dark alleyway, either. Some of them work in the tax field, or at least pretend to. If you’re not the trusting sort, and feel fairly confident in your tax-preparing abilities, you should be able to avoid tax shysters and people running a variety of tax scams with relative ease.
Even if you don’t run into a scam or someone perpetuating tax fraud, this time of year tax professionals can become overloaded with work, which in some instances might make them speed through your return, possibly leading to some mistakes. Really, it all comes down to who you trust more — yourself, or your tax advisor.
Technological Innovations Make It Easier
While pros use some fairly high-end tax software, you can still find some pretty decent software packages out there on the open market. Chances are, you or someone you know has already mastered a bit of tax software. With TurboTax, H&R Block and TaxACT all offering some very affordable (or free), friendly tax software for home use, it’s really hard to go wrong.
If you have a simple tax form to fill out, you might want to dispense with the software altogether, and just file a 1040A or 1040EZ form instead. The IRS website has a list of the different kinds of tax forms you’ll have to use, depending on your particular situation, which can help you decide how “simple” your tax return should be.