WHY I USUALLY DO MY OWN TAXES
“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.
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.
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!
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Chime in, do you prepare your own taxes or outsource?
image credit; google images-llctaxes dot com