WHY I USUALLY DO MY OWN TAXES

By on Apr 12, 2012 in Taxes | 16 comments

“I am proud to be paying taxes in the United States. The only thing is – I could be just as proud for half the money.” — Arthur Godfrey, entertainer courtesy of IRS.gov

There are two reasons why I usually do my own tax preparation.

Reason 1

Many years ago Money Magazine had a feature where they gave several tax preparers the same data and asked them to complete a tax return. Every prepared return yielded a different amount of tax due. How is that possible? Because the tax code is so confusing that there are a variety of interpretations concerning how to input the tax data.

Reason 2

When I used a tax professional, each year I found mistakes in the return. I would pick up the return, review it, and then have to return it to the preparer for corrections. How is does that happen? I’m not an accountant, yet, I found errors in my professionally prepared return every year. I understand that everyone makes mistakes, but every year?

I figured if the Money Magazine accountants couldn’t agree on how to prepare a tax return, and my tax preparers couldn’t complete one without errors, how much worse a job would I do? (Unfortunately, in 2010, I did have a small tax problem.) But, 2010 aside, paying a few bucks for Turbo Tax, saved me hundreds on accounting fees. Doing my own taxes didn’t even take much more time than putting all the records together for the tax preparer.

You definitely do not have to be an accountant or have a masters in taxation to complete your own tax return.

This Year I’m Using an Accountant

Although I usually do my own taxes, this year is different. Since we moved across country and bought and sold a house in two different states, I decided to use my corporate accountant for our personal taxes. But, I’m interested in saving money, so I decided to complete the return on Turbo Tax first and just let the accountant do the heavy lifting. The accountant will complete the forms associated with our home sale and the two different state returns. Since I decided in advance to file a tax extension, all I’ve done so far is sort the receipts and bought the Turbo Tax Program.

The Cheap Solution for Using a Tax Professional

My confession of employing a professional this year is tempered with the reality, that I’m still doing most of the work. By just using the accountant for the difficult forms, I’m making a trade off. I spend a bit more time, but I save a lot of money. Our tax records and returns are so extensive, that completing the usual schedule C’s, E’s, A, B, and D is just as easy as compiling the information. Hiring the accountant for the more confusing state returns and forms associated with the house sale and purchase is a great compromise. I’ve had so many challenges surrounding the “tax return issue” that I hope it works out okay.

I’ll let you know how it turns out!

Can’t Get Enough Tax Information? Check Out These Related Articles;

MSN Money asks, Should You do Your Own Taxes?

PT Money writes about the Tax Deadlines

Broke Professionals write about Eliminating Your Tax Refund

Smart Money instructs How to do Your Own Taxes

Financial Samurai ponders whether to Do Your Own Taxes or Hire an Accountant

Check out my submission to the Yakezie Carnival at Watson, Inc. this week.

Chime in, do you prepare your own taxes or outsource?

image credit; google images-llctaxes dot com

    16 Comments

  1. I never thought of having my CPA preparing my taxes as outsourcing. I usually give him a spreadsheet of my information and a copy of all the w-2s and 1099s. I have used a CPA since I went into business years ago and it is definitely worth it. I not only get my taxes prepared, but questions answered during the year for a token cost.

    krantcents

    April 12, 2012

  2. As much as I would like to do my tax on my own, I cannot really consolidate everything so I would rather hire a professional to do it for me. I decided it is better to spend money than commit mistakes that may put me into trouble.

  3. @Krantcents & @Cherleen- That’s two for hiring out tax preparation!! Glad it’s worked out for you both.

    Barb

    April 12, 2012

  4. Using TurboTax myself. May look at a professional at some point. Good to see this insight.

    BusyExecutiveMoneyBlog

    April 13, 2012

  5. Nice write up filled with insight and interesting elements !! Thanks for sharing..

    Vinod Arora

    April 13, 2012

  6. I do my own taxes on a free H&R Block program. I don’t have a mortgage or anything so I take the standard deduction- makes it super easy to complete.

    This Aggie Saves

    April 13, 2012

  7. Our taxes are relatively complex so we’ve been having a CPA do them. I used to do them myself without much difficulty. However I screwed up a stock related transaction and then got an IRS audit letter which is one reason we use a CPA now.

    Also there are big differences between finding a CPA and walking into H&R Block. The big companies apparently mostly use ‘licensed preparers’ for taxes rather than CPAs and the qualifications to be a licensed preparer aren’t too high.

    In any case its best to try and understand your taxes yourself as much as possible. Anyone including a CPA can make a mistake and you should review their work.

    jim

    April 13, 2012

  8. @Busy and AGgie- Okay the tally is now 2 more for doing their own taxes…..
    @Jim-and words from the wise, even if you use a professional, learn as much as you can about the process and check them out!! My thoughts exactly.

    Barb

    April 13, 2012

  9. We’ve used a local service for the last ten years, same CPA. As KC said, we also get some questions answered by a knowledgeable professional.

    101 Centavos

    April 13, 2012

  10. I almost always do my own taxes. My taxes are pretty simple right now though – the only thing that is not typical about them is my tuition but that’s easy enough to plug into the system I use. I get confused with taxes easily so when it gets more complicated I’m sure I’ll go to a professional.

    Daisy @ Add Vodka

    April 14, 2012

  11. Our taxes are relatively simple so we have been doing our own the last two years. We use Ufile to file online and it works quite well.Using Quicken to track all of our personal finance transactions throughout the year sure makes it easy.

  12. @101- Sounds like you found a competent person to help you!!! Glad it’s working out!
    @Daisy and Miss T- The programs are pretty good for most types of returns. But, it always helps to know a bit about the subject matter:)

    Barb

    April 14, 2012

  13. Hi Cindy, The internet is an amazing repository of info most of the time :) Thanks for the visit.

    Barb

    April 15, 2012

  14. I always do my own taxes with the help of Turbo Tax, but like you,our taxes were a bit more complicated this year, so we hired an accountant. I think we will probably go that route from now on. Curious to hear how your plan works out.

    Melissa@PersonalFinanceJourney

    April 16, 2012

    • Hi Melissa,

      I’m now faced with having to get started on the arduous task of organizing and inputting my part. I’ve decided to take it slow.

      Barb

      April 16, 2012

  15. Betty, It’s not uncommon for accountants to file an extension at the last minute!! Good luck

    Barb

    April 17, 2012

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