As tax season approaches, many people ask themselves one simple question – Should I do my own taxes. The answer isn’t the same for everyone and it depends on a couple of important factors. When asking yourself whether or not you should take on your taxes by yourself, you will first need to examine your tax situation. A straightforward tax situation makes it possible for most people to handle the necessary processes on their own.
Simple and straightforward tax situations are the ones that exclude investments, dependents, charitable contributions, a personal business or significant assets. If you have any of the tax situations, you will probably be better off if you hire a tax preparer.
Depending on their experience and the quality of services, tax preparers will cost you at least 100 dollars. If you opt for the services of a reputable accountant, you should be prepared to spend at least 200 dollars. According to the National Society of Accountants, the average cost of tax preparation in the US is 261 dollars.
Time and Experience
You should do your own taxes if you have the time and the patience to handle the process without professional assistance. There are basic, free of charge software programs created for the sole purpose of tax preparation. Such software products are tailored to the needs of people who don’t have accounting experience. If you can dedicate some time to getting the hang of it, you will be capable of completing the entire process on your own.
At least a few hours will be required to deal with tax preparation and that is if you already know what you are doing. If you are attempting to do your own taxes for the very first time, you will probably need a couple of days.
Understanding of Tax Laws
Some basic understanding of tax laws and procedures will be required to deal with taxes on your own. The IRS website features a lot of information. Use it as a test for your understanding and your knowledge. If you’re finding it difficult to comprehend the data, chances are that you’ll struggle with doing taxes. Most of the forms required are pretty basic. Still, you need understanding of the essentials to avoid errors.
Who should Opt for Tax Preparation Services
Now that we have taken a look at the kinds of people who can do their own taxes, let us examine a few of the scenarios in which hiring an accountant would be a much better idea.
People who earn more than 200,000 dollars per year should definitely opt for professional tax preparation services. If the IRS ever decides to make a check, it would be imperative to have all documents in perfect order. The very same applies to people who have recently started a business and the ones that have experienced a serious change in their financial situation.
If you have gotten married or divorced or if you have had a child in the family, you should also consider hiring an accountant for the purpose of tax preparation. Tax credits and deductions may expire due to marital status or age of kids. Professionals in the field are familiar with all of these tricky regulations.
Asking yourself, should I do my own taxes is different for each person. If you know the rules and things aren’t too complicated, it may be the right thing to do to save money. When hiring a professional to do the job, however, you’re working with someone who’s familiar with all tax laws and who can give you guidance through the year. Choosing one option or the other depends entirely on your priorities.