Should You Prepare Your Own Taxes?

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When I was growing up, right after the beginning of the New Year, while we kids were still excited to play with our new toys, my Dad would spend a Sunday afternoon laboring through preparing taxes for our family. It seemed like lots of paper to me then, but my Dad would eventually emerge from his room with the forms completed in pencil, and ready to be signed by my Mom.

Fast forward to today, and while there are still a few hold outs to the pencil and paper days, most tax returns are now done online or by using computer programs such as Turbo Tax. Unfortunately, the problem for many people, even using software programs, is that tax preparation has become overly complicated. In fact, the US tax code has become incredibly complicated, with about 3,400 tax law changes since the year 2000 alone. So even if you have
strong financial acumen, the more complicated your return is, the more you will most likely need a professional.

Why should you use a tax professional?

1. You may be leaving money on the table.

Many people may find themselves paying significantly more in taxes than what they might save in doing it themselves. A tax professional is often able to make valuable tax savings suggestions that a software program just can’t anticipate. The value of this advice can easily exceed the additional cost of consulting with a professional. For example, a tax accountant can provide you advice on tax-friendly ways to save for your children’s education, or how to reduce taxes on your capital gains.

2. It can save you time, and time equals money.

A professional tax preparer is so familiar with the system, he or she can quickly and easily accomplish tasks that might take even skilled taxpayers hours of research. For busy non-tax professionals, their time can generally be better spent earning money in their area of expertise.

Over the past few years, we have seen a continued increase in the number of clients who decide it’s time for help from a live person, such as the folks in our office. We offer clients services via mail, Internet, in person at our 2 office locations….any way we can to give our client the interaction they need to feel that everything has been done to complete their taxes in most thorough manner.

3. Are you missing anything, even on a simple return?

Even if you have a fairly simple tax situation and you choose to do your own taxes, let me make a suggestion: Consult with a good tax professional at least once every three to five years—just to find out whether you are missing anything.

4. Do you really understand the rules of the game?

You can’t successfully play the tax game if you don’t know all the rules. If you fall into any of the following categories, it may be time to consult with a good tax professional: You’re self-employed, have freelance income, own a small business, or have a hobby from which you derive income. You own real estate or are a landlord. You own investments that have capital gains and dividends. Making a mistake on your return can cost you quite a bit in interest and penalties. Although you shouldn’t be fearful of getting audited by the IRS, having your taxes prepared by a pro who’s trained in the tax code, can give you peace of mind.

The IRS is continuing to increase its efforts in its automated compliance program, which is why Joseph & Joseph CPAs works hard to anticipate how each client’s unique situation could generate an automated notice and take steps to avoid it or at least be ready to respond. After all, none of us like to get “love” letters from the IRS. Should you prepare your own taxes? Ultimately, the complexity of your finances should be the key deciding factor. If we can help you gain back those lost Sunday afternoons this tax season, please give us a call to set up an appointment. Make sure to let us know that you are a client or friend of Szarka Financial, as we offer a special rate through our strategic partnership with them.