Is It Ever Okay To Do Your Own Taxes?
Everyone has to pay taxes, the question is:
"Does it make sense for you to pay somebody to file your taxes or can you do it on your own and pass the savings on to your bank account?"
Tax preparers typically cost around $100 on the low end and depending on where you live/how complicated your taxes are, the price will go up. I'm not going to sugarcoat it, doing your taxes with a professional can be pricey, especially if your case is complicated. On the other hand, hiring a professional can be well worth the cost because they are the ones that can help you figure out your deductions and any nuances in the tax law that you can take advantage of. There's really no across-the-board standard solution here and your situation may change from year to year. It's definitely worth revisiting this question every single year to make sure that you are making the best choice for your wallet and sanity!
So, when can I save?
Before you make a decision to file on your own (through IRS website or using software like TurboTax), ask yourself if the following is true for you:
You have a very simple, uncomplicated tax situation: one job with a W-2 income, little to no dependents, no big investments, and you don't own a business. Unless you anticipate having a large number of deductions, hiring a professional really doesn't add a whole lot of benefit, as you're not going to be able to take advantage of the hidden tax breaks that the professional is privy to.
You are able to focus, eliminate distractions, and are willing to take the time to make sure you do it right! You're not going to want to rush this, this is your money. You want to make sure that you get the best return possible so doing your taxes is not the time to be multi-tasking. Set yourself some time when nothing else is going on, focus on what you're doing and make sure you're entering in all the data properly! Sometimes a decimal point in the wrong place can make a huge difference.
You are computer savvy and tend to feel comfortable navigating software on your own. If you have no problem researching questions that you have on the IRS website, the DIY approach might just be for you! Remember, if you do this you're in the driver's seat and you have to make sure that you're taking this seriously. If you like having that type of control over your money and you are comfortable with looking up the answers to your questions then go for it!
Just Hire Someone
If you own your own business or have a complicated tax situation with lots of different sources of income like investments, rental income, 1099’s and W2’s you're going to want to use a professional. With 2017 being the last time when you can really itemize all of your deductions as an individual you want to make sure that you're taking every deduction that is allowed to you. It really pays to have somebody guide you through deductions for home office, business meals, travel, and vehicles. Here are some more factors to consider:
Did you have a major change in the last year? Maybe you got married? Or bought a house? Had a baby? All these things will impact your taxes and you might want some help understanding how to document those changes for the first time.
If you earn over 200,000 a year, your chances of getting audited go up so you want to make sure that everything is done properly. The IRS might now have a ton of time to go after all the small fish but you are a big fish now! It's definitely worth it for you to get a professional involved because they will make sure that everything is on the up-and-up and let's be honest you can afford it! This is not the time to be stingy with your money, it could end up costing you a whole lot more if the IRS does come around and your records are not in tip-top condition.
You should definitely use a professional if you can’t devote the time or don’t have the patience to deal with it. I can't stress this enough, taxes and the IRS are not something that you should be taking lightly so if you don't have the time to take care of it, if you don't have those few hours to put aside with no distractions, then you should probably use a professional.
Finally, if you don't trust yourself to get the best return then leave the prep to a professional! It's all about what you're comfortable with! Know yourself and if your time is better spent elsewhere then let the professional spend their time on it!