You may be really looking forward to filing your taxes in the hopes of getting a big tax refund this year. Unfortunately, the process of filing taxes is fraught with potential mistakes, making it hard for many people to do their taxes on their own. Are you undecided about whether or not you need someone to do your taxes for you? Check out this guide to help you decide which one will be the most practical choice for you.
Filing Alone: Pros & Cons
Filing alone means that you’ll be filling out paper forms or submitting your information through an online filing system. You’ll be completely on your own, so it’s important to understand the benefits and drawbacks of this option before you decide to go this route.
Filing Alone – Pros
- Cost: It’s free to file your own taxes on paper. If you use an online filing system, the costs are minimal, especially if you have a simple return. A basic federal return can often be filed online for free, with a small fee added if you want the service to file your state return as well.
- Convenience: When you file your taxes on your own, you get to decide when and where you do it. There’s no appointment to worry about and you can sit in the comfort of your own home and complete the return at your own pace.
- Online services: One of the biggest factors that has led many people to start doing their own taxes is the availability of online tax return filing services. These systems are set up to make it as easy as possible to file your taxes. Most have step-by-step questions that help you figure out what information you need to include and how to get the most deductions possible. If possible, look for a service that guarantees you the most deductions and offers assistance in the event of an audit.
Filing Alone – Cons
- Mistakes: The biggest disadvantage to doing your own taxes is the possibility of making a mistake. You are legally responsible for your taxes, so any errors on your return could come back to haunt you. Even if you commit tax fraud accidentally, it could cause you to pay penalties, interest or additional charges. Going to a tax preparer can help minimize those mistakes.
- Time: Many people underestimate how long it takes to fill out a tax return. According to the Internal Revenue Service, the average taxpayer needs about 22 hours to fill out their return. That number increases to 32 hours if you have to file a Schedule C or Schedule E. Using a tax preparer can make the process a lot smoother and faster.
Using A Preparer: Pros & Cons
A tax preparer is professionally trained in the tax codes and laws. They can assist you in filling out your forms and help you find deductions for which you qualify. However, there can also be some downsides to this option for filing your taxes.
Filing With a Preparer – Pros
- Accuracy: A tax preparer’s job is to know the tax code. That means that you are much more likely to file a return that is completely accurate and in compliance with the law if you use a tax preparer. In the long run, this can help you avoid penalties and the headache of dealing with an audit or unexpected charges.
- Savings: Many people are able to get a bigger refund by using a tax preparer. That’s because these professionals know about all the possible credits, deductions and itemizations that you can use to maximize your refund.
- Time: Doing your taxes on your own can take up a lot more time than you might expect, and it’s hard knowing how long it will take when you start. With a tax preparer, you have a scheduled appointment where you know your tax return will be taken care of and you can schedule other things around that meeting.
Filing With a Preparer – Cons
- Cost: The tradeoff for a bigger refund is that you’ll probably have to pay a fee to have a professional do your taxes for you. That fee can vary widely depending on what service you use.
- Reliability: If you’re using a tax preparer, you may not know for sure whether the person is reliable enough to ensure that your tax return is error-free. CPAs, enrolled agents and tax lawyers are your best options to reduce this risk.
Making A Decision
Doing your taxes alone is definitely a risk, so you should only do it if you’re familiar with the tax code. In addition, those who have a simple tax return may consider using an online filing service that walks you through the process.
If your taxes are complicated or if you’re new to the process of filing taxes, then using a tax preparer is likely a preferable option. In these cases, the cost of hiring a professional will often offset the mistakes and missed deductions or credits that could have occurred if you did it on your own. Be aware that some tax preparation companies offer a free tax filing service – however, the person doing your taxes in this case may not be a trained tax professional, so be sure to do your research before utilizing these offers.
It’s important to take your taxes very seriously, so put a lot of thought into which option you’ll choose. Keep in mind that going to a tax professional may help you understand the process better, allowing you to consider doing taxes on your own in the future.