Should You Pay Someone to do Your Taxes?

Should You Pay Someone to do Your Taxes?

It’s that dreaded time of the year, tax time. Only a select few individuals actually like doing their taxes because of the potential headache it can be. The tax code is thousands of pages long, so how can it be easy to fully understand what to do? Thankfully, there are a options that make it less of a nightmare for most of us to file our taxes.

What Are Your Options When it Comes to Taxes?

There are numerous options when it comes to doing taxes. I still remember being in high school and filling out the 1040 EZ form. It was one page and involved basic math. I took my W-2 and wrote down the appropriate numbers and was done in less than 30 minutes. You may not find yourself in this situation, but is still possible for a select few though you do need to print the forms off of the IRS website. These days the more popular ways to take care of taxes are through using tax preparation software such as

Turbo Tax or H & R Block or by paying someone such as a CPA or other tax preparation firms. The thing to keep in mind with the last option is the value you’re receiving as

well as their knowledge level.

Don’t Be Afraid to File Your Own Tax Return

A 2010 study showed that 90% of Americans pay someone professionally or use tax preparation software to file their taxes. I know for some hiring a CPA is the best and wisest option available, but for many that should not be a need. For many individuals that have basic W-2’s and a few 1099’s using tax software should be more than enough to take care of your taxes. I used the H & R Block platform for many years and the system walks you through it very easily and have heard the same thing about Turbo Tax. If you’re able to input numbers into a software program, then often times that is all that’s needed and you save yourself money in the process. One thing to keep in mind that if you do go to a tax preparer like H & R Block or Liberty Tax many of the tax preparers there have simply gone through a class to teach them to use the software. You may find some good ones there, but they’re usually not experts and you can generally accomplish the same thing on your own.

When is it Time to Get Help With Your Taxes?

This is a question my wife and I had to ask ourselves last year. I had always prepared our own taxes and enjoyed working with the numbers to be honest. However, our business took off two years ago and with that numerous moving parts became a part of our tax picture, making it more complex. It was at this time that we spoke with some local friends and found and hired a CPA. I hate spending the money, but at the end of the day he is an expert. We have numerous forms that have to be filled out which led to a nearly 30 page tax return last year and it just made sense to pay someone to do our taxes. In my opinion, when you find your taxes to be overwhelming or you’re at a point

 

where you’re not confident doing them that is then the time to consider paying someone to do them. Just make sure that if you do pursue this route to make sure you hire someone reputable who has the requisite experience to handle your taxes.

What Do You Do?

Do you pay someone to do your taxes or do you prepare them yourself? Please share your thoughts in the comments.

Image by 401(k) 2013 / flickr

Comments

  1. says

    I have paid a CPA to prepare my taxes for years. I get to ask questions during the year for no additional cost. My cost is very low because I have used him for 25 years.

    • John S @ Frugal Rules says

      We’ve just started using a CPA last year as our situation became too complex. I love that we’re able to ask questions throughout the year and not have to worry about cost

    • John S @ Frugal Rules says

      That makes complete sense Lance and says something about the product if you, being a CPA, use the platform.

  2. says

    I have used TurboTax for my taxes for years. I will probably keep using it unless my financial situation becomes more complex. Then I’d invest in a CPA.

    • John S @ Frugal Rules says

      I think that really is the way to go for many, especially if your tax situation is not too complex. CPA’s are great, but is an unnecessary expense if you can do them on your own.

      • says

        I just finished my taxes this weekend. I have to say that as my investment income becomes greater, I am tempted to shift to an accountant. If for no other reason than to make sure that everything was done right.

        • says

          Since the tax rules for investments changed, the statements that we get from our brokerage companies are more helpful, but it is easy to get confused between FIFO, LIFO, and weighted average costs.

          • says

            I also have some investments in MLPs, and am planning on expanding my options investments. I imagine that this year will be even more annoying than last year when tax time rolls around.

          • says

            That makes it even more complicated! Once you are in MLPs and options, having an experienced accountant can save you a lot of money.

  3. Buck Inspire says

    I’ve been doing my own with a variety of different software packages or websites. I sometimes wonder if I should pay someone so I can pick their brains for more deductions. Do you know the cost of a standard joint tax return with a primary residence and some stock investments?

    • John S @ Frugal Rules says

      That’s how I was for years Buck and enjoyed doing them, but went with a CPA after our business took off. In terms of cost, that is tough to say as it can vary quite a bit. From my experience the two main factors that impact it is the time the CPA spends on your taxes as well as their experience level. Another thing to consider is how organized of a tax packet are you giving the person. We’re pretty organized because I tend to be that way, but we also want it to be easy for our CPA. We pay about $350, but we have quite a few forms that must be done. That said, I know it’s also impacted based off of where you live and have seen variances of several hundred dollars.

  4. Emily @ evolvingPF says

    I like doing our taxes by hand and following up with tax software to see if I missed anything. We don’t have a complicated return once you know how to deal with a 1099-MISC box 3 (which the tax software REALLY wants to make “self-employment” – it’s not). We take the standard deduction and aren’t self-employed so it’s not too many forms overall.

    • John S @ Frugal Rules says

      I did that for a few years and then moved on to just doing them in H & R Block’s platform. It did have a few glitches like that but I ended up just calling them to get a work around to the problem.

  5. says

    I currently pay someone to do my taxes, but I learned how to do them at an early age. The first time I had to file, my dad sat me down and made me fill out the forms myself. Now, I own my own business and things are more complex, so I need the help!

    • says

      I totally get that! If I just had one W2, it would be easy to do it myself. I own three businesses, so my taxes are super complicated.