Every tax season, we are faced with a decision: should you let an expert handle it or do your taxes yourself? Especially for the thrifty tax payer, it makes more sense on the surface to do it yourself. However for financial and personal reasons, sometimes taxes aren’t as cut and dry as other do-it-yourself projects. Sometimes it is simply the responsible thing to do to let a professional in the field take the reins when it comes to something as important as our payments to the government.
A large part of this important decision usually boils down to whether or not your taxes are simple or complex. But how do you know for sure? We’ll cover when you should, or shouldn’t, decide to do your taxes without professional assistance.
When Taxes Are Simple
Using common forms such as the 1040EZ or other supporting documents are fairly straightforward, even for those new to filing their taxes. Free IRS forms, or eFiling can make the job even easier, and making the choice to invest with tax software can assist even more. Most entry level to intermediate jobs will provide W-2 forms and even if you don’t comprehend the exact wording on the forms, it’s an easy task to get a more experienced colleague to assist you in understanding where you stand with tax jargon, making the process required to do your taxes a simple part of your routine.
For people like college students or those who are just now striking out on their own, low income jobs and lack of viable assets usually find that their taxes are quite easy to file. People who are single, have no dependents, or are unemployed can also generally complete their taxes easily and with little or no professional help.
..And When It Gets Complicated
As you go through life, it might become complicated to do your taxes alone. Varying factors such as owning or operating a business, purchasing a home, owning a car or other mode of transportation, and unexpected windfalls or losses can catapult your taxes from simple to hopelessly complicated in an impossibly short amount of time.
Filing concerns with state, city, and governmental taxes can become complicated. Having different financial scenarios or an abundance of complexly worded forms are a sure sign that you might want to seek out professional aid when you do your taxes.
It’s easy to miss something even with do-it-yourself tax software that promises to ease of use with premium packages. If your city or state passes new laws and regulations or you’re worried about overlooking a crucially important piece of necessary information that could lead to greater returns, hiring a trusted professional is a smart move that could help you avoid unpleasantness with the IRS as well as gaining you more money than you originally thought possible.
Tax specialists worth your time are usually well-versed in different financial scenarios as well as current tax laws and regulations. This form of expertise can spare you a lot of money and time, especially if you don’t thoroughly understand what you’re doing or can’t get your calculations to add up after reviewing them several times. And remember, not being able to do your taxes isn’t a sign of financial weakness or ignorance. Sometimes letting people play to their strengths is the important thing, particularly if you have a business or dependents that are relying on you to get things right the first time.
Another aspect to consider in the process of choosing whether to do your taxes is whether you have enough time. Sometimes life can get busy or complicated, especially during tax time. Even if you have the skills and know-how to do your own taxes without help, the weighty investment of your time and energy are resources that you can’t get back. This is part of what makes hiring a professional so attractive to most tax payers. Instead of spending hours of your own time that could be spent on other activities better suited to your personality or profession, you hand off the entire responsibility to someone who not only has more experience but more time as well.
Still feel confused? In the end, hiring a tax professional or deciding to do your taxes yourself are both equally valid and potentially profitable endeavors. Which one you decide to go with, however, is completely up to you. When the way your tax situation, deductions, and asset allocation start to matter, that’s generally the time that you need to start looking for a professional, but with enough knowledge of current tax procedures, regulations, and laws it’s possible that the decision to do your taxes on your own would not only be more profitable but more complete than allowing an professional with no personal involvement to handle the situation.
The decision is yours.