The opportunity to do your own taxes has increased in the early 21st century thanks to the emergence and evolution of online tax software programs. However, before you dive into one of these to complete your own taxes, consider the advantages and disadvantages relative to hiring a tax professional to do the work for you.
The main selling point of doing your own taxes is cost savings. You do not have to hire a tax professional, which usually runs around $100 at the very low end. When you use an online program, your only costs are the software usage fees and your tax filing fees. More control over your taxes is another advantage. You do not have to entrust someone else to prepare your tax returns correctly. Another small advantage is that you become more knowledgeable about taxes and money when you do your own taxes.
The United States tax code is very complicated. Whereas professionals invest significant time in education and continued education, you have to rely on your basic reading for familiarity. In his December 2011 MSN Money article "Should you do your own taxes?" Jeff Schnepper notes that the IRS estimated 2010 do-it-yourself tax filers spent an average of 23 hours to organize, prepare and submit their returns. If you add a small business Schedule C form, the average was 32 hours. Increased chances for errors and limited support help from online tax software programs are also disadvantages.
Advantages of Hiring a Professional
The main advantage of hiring a professional to prepare your taxes is the knowledge and expertise he brings to the process. The professional generally has a stronger working comfort with the IRS tax code and is likely aware of recent changes. He also saves you a lot of time, which you can invest in other pursuits. The tax professional can also ask questions and gain more clarity than an online software program.
Disadvantages of Hiring a Professional
The cost of professional tax help is a main disadvantage. The more reputable and experienced the firm, the more you will have to pay. The challenge with the lower end tax professionals is the limited peace of mind you get when trusting them with your financial information and tax preparation. Even if you have a tax professional, you may still spend hours organizing papers and explaining things to him.
- Comstock/Comstock/Getty Images
- Do All of My Tax Forms Have to Have My Married Name?
- An Unfiled Tax Survival Guide
- What Is Needed for Filing Taxes With Dependents?
- What Percentage of Federal Taxes Is Withheld From the Check if Filing Single?
- What Brings Your AGI Down?
- How to File Taxes on a New Home
- Do Married Couples Have to File Joint on State Taxes If They Filed Joint on Federal Taxes?
- How to File Taxes When You Get Married
- What Happens When Half the Year You Claim Single & Half the Year You Claim Married?
- The Advantages and Disadvantages of Doing Your Own Taxes Vs. Hiring a Professional