Whether you should prepare your own tax return this year depends on a number of factors ranging from your comfort level doing the math to major life changes such as marriage or retirement.
The case for doing your own taxes:
- You know more about your financial situation than anyone else. Legitimate deductions you forgot to mention to your tax preparer might suddenly spring to mind when you’re in the thick of doing your own return.
- Tax preparation software makes it easy to organize, calculate and file your return.
- Your tax situation isn’t that complex. If you’re single with no dependents and have no income from investments or property, doing your own taxes may be the way to go.
- Preparing your own taxes can be less expensive. The U.S. Government has many free online resources available, including free e-filing for simple returns.
The case for leaving it to the pros:
- You’re self-employed or do a lot of freelance work. If this is the case, you may find it difficult to navigate all the rules and regulations that apply to your situation. An experienced tax professional can eliminate the guesswork and ensure that you receive every deduction you’re entitled to.
- You have numerous investments. A skilled tax preparer is more likely to be up to date on the latest tax laws that apply to investment income.
- You’re a born procrastinator. Just making an appointment with a tax preparation professional can provide the motivation you need to find those financial statements, gather those receipts and get the ball rolling well in advance of April 15th.
- You went through major life changes. Marriage, divorce, retirement, a new baby—all these events affect your filing status. If you’ve recently experienced a significant change in your personal life, it might be best to let a professional do your taxes this year.
- You’re itemizing deductions instead of using the standard deduction. Deducting that business/pleasure trip to the Bahamas may seem perfectly reasonable to you, but the IRS might see things differently. Sometimes it’s good to have an objective and knowledgeable third party review your deductions.
- You want an advocate in case of an audit. While tax preparation professionals don’t usually serve as legal representatives, their knowledge of the tax code and detailed records can be invaluable in case of an audit. In fact, some tax preparation software companies even offer an audit support department.
Let The First help you make more informed financial decisions. Visit our Trust & Wealth Department to learn more.
Do you prefer to do your own taxes? Tell us why or why not in the Comments below.