 | Turbo Tax and other “off-the-shelf” software has become a very popular way to save money on your income tax preparation. But do you really save money? Is preparing your own taxes a smart move? Read below as we explore some answers......... |
There are times when preparing your own tax return makes sense. If ALL of the following are true, you will probably do just fine prepping your own taxes:
- You have plenty of time to kill
- You don’t own a home
- You don’t have stock sales
- You don’t have kids in daycare or with college/higher education expenses
- You have no employee expenses
- You don’t have a business or did not receive a 1099-misc
- You don’t own investment property
- You are very comfortable working with “off-the-shelf” software
- You won’t need any help in dealing with the IRS or tax advice
There are many reasons why you should NOT prep your own tax return, including the following:
- Are you afraid of being audited? Not knowing tax law makes you more susceptible to being audited; and not having a representative (who prepped your taxes) to help you with an audit makes you more likely to lose the audit.
- Are you getting the best refund? Professional tax preparers understand tax law. They prep hundreds of tax returns each year. It would make sense they are better equipped to minimize your tax liability and thus, maximize your refund.
- Self-prepared returns are expensive to prepare. Yes, you read that right. Generally it costs you more to prep your own taxes than it does to have a professional prepare your return. Consider this: in 2012, the IRS estimated that the average taxpayer needed 13 hours to do his or her 2011 tax return. How much do you earn in 13 hours at your job? Is it worth your time to prep your own taxes?
- Self-prepared returns miss too many deductions. Did you get all those education credits? (big benefit!) Did you depreciate that home office? (you should, because the IRS makes you account for depreciation anyway when calculating your home’s cost basis) Did you include all interest and real estate taxes paid through your refinance or home purchase? Did you have expenses related to your investments? Did you include your tax prep expenses (even software costs) on your Schedule C or Schedule E to save self-employment tax?
So while you may save money on the tax preparation costs, you are likely “tripping over dollars to save pennies”.
Contact us today for reasonably priced help with your tax preparation. It doesn't hurt to pick up the phone and explore your options!
If you have already discovered the benefits of using our services, share the good word with somebody you know who prepares their own tax returns. Forward this message and give them our contact info. We would be happy to help!