Like it or not, tax season is right around the corner. How confident are you that you can file your taxes accurately (and get the maximum amount of money back) by yourself?
If you’re not confident in your tax knowledge, don’t worry, because 52 percent of Americans aren’t.
Working with a tax professional like a certified public accountant (CPA) can help you feel more at ease come tax time. That’s probably why 56 percent of people have someone else handle their taxes for them.
At the same time, though, there are also benefits to filing your taxes yourself.
If you need help choosing how to file taxes this year, keep reading to learn about the pros and cons of hiring a CPA and filing taxes yourself.
Pros of DIY Tax Filing
DIY tax filing typically involves using some kind of online service or tax preparation software (like TurboTax). With these programs, you simply input information about your income and expenses and all the hard stuff is handled for you.
Some of the benefits of DIY tax filing include:
Save Money
Reduced cost is perhaps the biggest benefit you’ll experience when you file your taxes yourself.
Hiring an accountant can be expensive, and you can save quite a bit of money by filing your taxes on your own. In fact, the IRS website actually allows you to file electronically for free via their website.
Learn About Your Finances
When you file your taxes yourself, you also gain important insights into your financial situation.
A lot of people know very little about their money other than the amount they bring home each week. Preparing your taxes can help you figure out whether or not you’re taking advantage of the potential credits and incentives available to you.
Cons of DIY Tax Filing
At the same time, there are also drawbacks to filing your taxes yourself, including the following:
Time-Consuming
If you’re planning on filing your own taxes, you better plan on setting aside a significant chunk of time to complete the task.
You’ll need to make sure you have all your tax documents (1099s, W-2s, etc.) on hand, along with receipts and expense records if you want to deduct anything from your final tax bill.
Insufficient Customer Service
Even if you use a tax preparation software, customer service is typically fairly limited.
You’ll be able to get help with basic troubleshooting (password resetting, navigating the website, etc.) when you file taxes yourself. But, if you have more detailed questions, you probably won’t be able to get the help you need without going through a lot of different channels.
If you don’t get the help you need and just make your best guess, you could end up missing out on important savings opportunities or getting audited.
Increased Error Risk
If you are part of the majority of Americans who aren’t comfortable filing your own taxes, then taking the DIY approach is likely to cause a lot of anxiety.
There’s definitely a greater risk of error when you take this approach, even if you do think you know what you’re doing.
Pros of Hiring a CPA
If you think that the cons of DIY tax filing outweigh the pros, you may want to consider hiring a CPA to do the heavy lifting for you. Some of the benefits of working with a CPA include:
Peace of Mind
When you hire a CPA, you can rest easy knowing that your taxes will be filed correctly.
CPAs have years of tax filing experience under their belts and know how to avoid errors and ensure you get the most money back on your tax return.
Working with a CPA also saves you a lot of time and stress. You can simply turn over your information to them and let them handle the filing process.
Access to One-on-One Advice
When you file your taxes yourself, it can be hard to get your questions answered. When you work with a CPA, though, you have access to one-on-one advice from a tax professional.
You’ll be able to find answers to all your questions and can learn how to save as much money on your tax bill as possible.
This one-on-one advice is especially beneficial to business owners and people who are self-employed.
Deductible Tax Preparation Fees
There’s also a good chance that you can deduct the cost of your tax preparation fees from your tax bill. If you were planning on filing yourself to save money (even though you don’t feel confident filing), be sure to keep this benefit in mind.
Cons of Hiring a CPA
Of course, hiring a CPA might not be the right move for you. Some cons to consider include:
Scheduling Can be Difficult
CPAs are busy people, especially during tax season. If you wait until mid-March or early April to file your taxes, you may have a hard time getting in for an appointment.
If you want to work with a CPA, it’s important to schedule an appointment with them as early as possible.
More Costly (But Not Necessarily!)
Of course, hiring an accountant does cost more money than purchasing a DIY tax preparation software. That said, you may easily recoup the price of a CPA by getting a bigger refund with the help of a trained professional.
Also, you may be able to write off your tax preparation costs and deduct them from your final tax bill or from your tax return (so you won’t necessarily have to pay out of pocket). This potential write-off is especially appealing to those who have a more complex financial situation (you own multiple properties, you’re self-employed, etc.).
Need Help Figuring Out How to File Taxes?
As you can see, there are both pros and cons to filing your taxes yourself and hiring a CPA.
If you’ve decided that you do need help figuring out how to file taxes and want to work with a CPA, we can help.
Contact us today to set up a free consultation and learn more about our tax preparation services.
If you live in Florida, New York, Maryland, Utah, or Washington, D.C., we’re here for you!
