Should I do my own taxes. . .

Posted by Bruce Mc on Sep 12, 2008 in Form 1040 Information, Opinions | 2 comments

This is a guest post from Andy over at $aving to Invest. I am very honored to have Andy here as his blogs on blogging help me in my blogging. This article goes along with my last post Choosing a tax preparer. . . This article was inspired by my guest post Real Tax deductions that may surprise you at $aving to Invest where Andy had commented on the money savings a tax prepare can save you.

Thanks again Andy.

When it comes to doing your taxes, one question that most people have asked themselves at some point is, “Should I do my own taxes or hire an accountant?” When I first started filing tax returns they were very basic and I used to do them myself. However once I started working full time, investing and undertaking further education I started using an accountant to file my taxes. They make life much easier and a good accountant will by far save you more money than you would pay in preparation fees. However you need to weigh up your own situation to determine the best and most cost-effective way to prepare your taxes.

So how do I know if need an accountant? The more complicated your taxes are and the greater you earnings, the more likely it is you need a tax professional. The easiest way to determine this is to first try to do your taxes on your own. If you find it’s too difficult, or if you feel like you’re making mistakes, seek out an accountant or a tax preparation company. {Bruce here, I just want to add that when deciding on an accountant/tax preparer know who you are hiring, if you have a question check my post Who is:}

Though I did my own taxes for a long time, I gave up once they became complicated and too much work. My brother referred me to his friend, who was an excellent up and coming accountant and someone I was very comfortable to pay for doing my taxes. I was sure he would get the maximum return I was entitled to and provide assistance with any future audits if needed. With income from various countries (due to multiple investments) having a knowledgeable and competent tax professional greatly assisted with my family’s taxation impacts and he has provided sound tax related investing advice on a number of occasions. Not to mention all the money he saved me.

From my experience — and this may not be true for everyone — having an accountant prepare my taxes has paid for itself. Though I’m a relatively smart guy and follow directions well, there are things I miss when I do them myself. Further, the tax code is updated every year and most of us non-accountants don’t have the time or background to keep up with all the changes and possible deductions. Accountants normally have tax preparation software and tax checklists that enable them to file taxes quicker, with much fewer errors and to try and get back as much as legally possible for you. For example, did you know you can claim the fuel /driving costs to and from training classes/courses you go to using your own car? {Bruce here – what Andy is referring to I believe is on Form 2106 when deducting work related expenses if you attend a training class or CE course for your employer you are able to deduct any expenses that your employer doesn’t reimburse you for. To see if your specific situation applies to this rule, please check with your preparer.}For multiple days or year-long programs, that can add up to hundreds of dollars in deductions most of us wouldn’t know about if doing our taxes on our own.

A good accountant will do more than just file your taxes; they will actually save you taxes and provide sound tax related advice. The other thing is to always choose a qualified accountant you are comfortable with, trust and has good referrals.

For more on this topic please see yesterdays post and/or More on “finding a pro”. . .