Perhaps it seems a little premature to start thinking about whether or not you need to hire someone else to prepare your taxes. However, if you stop and think, you will realize that the end of the year is approaching. You should be figuring out your 4th quarter tax moves, designed to reduce tax liability, and getting ready for the coming tax season. Part of getting ready, though, includes deciding whether or not someone else needs to prepare your tax return. Here are some things to consider as you make your decision:
How Complex is Your Tax Return?
One of the biggest issues is the complexity of your tax return. If all you have is a Form 1040, along with a couple of Schedules, it’s usually not a big deal just to do your own taxes. The IRS has fillable forms online, and it is possible for you to get relatively inexpensive tax preparation software. For a long time, I actually just filled out my tax return by hand, all on my own.
However, my tax return is increasing in complexity. My home business requires its own tax return, and we have investments to include. As a result, we have multiple returns, Forms and Schedules. It’s easier at this point to have the accountant to take care of it.
How Much Time Do You Have?
Honestly, I could probably do my own taxes. I am capable of completing the return on my own, and my mother used to work for H&R Block, so I could get help from her if I needed it. However, it can be incredibly time consuming to fill out all the forms, double check them, and make sure I am getting the best benefit. Tax preparation software could help, but I would need a rather fancy package to take care of all my state and federal tax preparation needs. Plus, I’m not sure that, even with the help of software, I have the expertise to take advantage of everything.
By the time I finally began seeing the accountant, I was up to five hours to prepare my tax return on my own, since I often had to look up instructions for different forms, and double check new tax laws. Now, I just gather my documents (I keep receipts organized in a folder, and keep other documents organized throughout the year) and head to the accountant — who has the basic info from previous years. The whole process takes 45 minutes to an hour and a half (sometimes the accountant runs two or three different scenarios to see how to best reduce my tax liability).
Only you know how valuable your time is. By the time I buy the “premium” state and federal version of tax prep software, and then spend the time to prepare my return, I come out a loser, since I value my time fairly highly. However, if you have the time and the expertise to prepare your own return — no matter how complex — it might be worth it. But it doesn’t hurt to consider the alternative, and consider that it might be worth it to pay someone else to take care of it.