Should I Do My Own Taxes or Hire a Professional? 15 Personal Finance Bloggers Weigh-In!
This is a common question people have regarding tax preparation. On one hand, the services of a professional tax preparer could be costly- potentially cutting into a much anticipated income tax refund sorely needed by many Americans. On the other hand, skipping the services of a knowledgeable tax professional familiar with U.S. tax codes and laws could cost even more money if your self-prepared filings are inaccurate. These days things have an extra layer of complication if you do some of your transactions online and handle bitcoin. You can find information if you check out xcoins.io, but if you do handle bitcoin yourself I would suggest you get a professional to handle this for you just to be safe. This also gives you someone to contact if anything related to this new filing brings up any issues or raises any questions.
This subject is especially important for people with more complicated financial scenarios: small businesses, landlords, etc. I happened to be in that category, so I went to the “interwebs” to get help. To help settle the matter, I posed this question to some buddies in a personal finance blogger group. The responses were varied with some suggesting that a person should almost always use professional tax-filing services and others recommending self-preparation with applications like TurboTax. Then, there were the folks advising people to give tax preparation a whirl themselves comparing results their professional preparer’s.
Personally, I’ve used a CPA for years since we do have a business situation to consider, but based on the responses below I might be changing that up. Without further ado, let’s see what my brainy buddies have to say about self-serve versus hiring out tax preparation. We recommend taking a look at this Annual Return Filing Services Singapore company and improve your finances.
Linsey Knerl of 1099Mom.com– It will totally depend on your situation, but I do my own. Our local preparers are unfamiliar with my online/digital business, and having to explain everything to them is not a good use of my time. I’ve used the TurboTax Professional for 5 years and have had no issues. I even got a form audit 2 years back because one of my 1099’s was miskeyed at the IRS, showing one company paying me $60K instead of $600. The software generated the right form, gave me all the steps to document and send it, and it was closed and resolved within a month. I was also given some face-time with a professional for my questions related to issuing W-2’s to my kids. I’m hearing, as well, that with all the healthcare changes, some tax professionals are not using all the tools available to them. So, I’m reading this Health policy blog to be familiar with some of those changes. Some professionals are top notch, but like any industry, there will be duds. I know I’m doing mine right for my business and family situation, so I’ll keep doing it for now.
Eric J. Nisall of AccountLancer.com– TurboTax is good for very basic 1040 returns. The problem I see with it and similar programs is that everything is after-the-fact, so if you don’t know what you’re doing during the year, you can be missing out on how you approach business operations. I would say having someone prepare your Schedule C (or 1120-S) and then save money by copying the info over to TurboTax and filing the 1040 on your own would be a moderately safer option to save some cash. There are always drawbacks to doing things yourself, but some people are confident trying. Just remember that it’s cheaper to pay someone to do it right the first time than it is to pay someone to fix it, plus interest and penalties should you do it wrong, all in an effort to save a few bucks. Also, tax consulting goes a long way if you want to learn more about your taxes.
Nicole Rosen of FinanceDiva.com– You don’t HAVE to use a CPA. You can use TurboTax and other similar programs. However, in order to take full advantage of them then you need to spend time educating yourself on the tax laws. I have been doing taxes professionally for 10 years and I’m not a CPA. I am a tax instructor along with tax preparer. I teach and oversee other preparers.
Doug Nordman of the Military Guide– I’ve done my own taxes for over 40 years. (Thanks to my Dad for drawing the line when I earned my first paycheck. Now, I’m also doing his tax returns too.) Nobody will ever care as much about your taxes (and your returns) as you do. The best part of doing your own taxes is that you’ll learn the issues and options for your situation. You can’t get that knowledge by simply discussing your return once a year with a tax preparer or even a CPA. Once you’ve done your own returns for a year or two, you’ll know what planning you should do for future years. TurboTax is “good enough”. After a year or two you’ll want to consider outsourcing to someone who knows at least as much as you do about your tax situation so that you can spend your time on earning more revenue. And when you find that professional, you should be meeting with them quarterly or even monthly to continue your planning & learning.
Casey Fleming, author of the Loan Guide– I’ve used an EA for over 30 years. I have had my own companies and rental properties, so they’re somewhat complicated, but I’ve NEVER been audited.
Christine Beeby Odle of RockinBB.com– The statistics say that having a CPA will cut your tax liability by up to $1500 or more. Many deductions, strategies get left behind by someone who just does data entry. I would HIGHLY recommend a CPA – but spend some time interviewing as if you were hiring them for a job, because when you pay a fee that is exactly what you are doing. Especially if you are self-employed. I can’t stress this enough.
Jackie Beck of the DebtMyth.com and creator of the Pay off Debt App– You can totally do your own taxes with a business, using the Basic version of TurboTax. It’s just a matter of what you’re comfortable with.
Bobby Lee Creator of 2 Minute Finance– I don’t have a CPA, but I have used a tax preparer for the past 5 years or so. But in the past 3 years, I’ve started to “fake” prepare my taxes on my own, in parallel to my preparer. Just to see if we arrive at the same number. One year she came out ahead with a much larger refund than I did. So I’ve been inclined to keep her on.
Eric Rosenberg of PersonalProfitability.com
I had a CPA do my taxes every single year until last year. I switched to H&R Block online and it did a great job for my needs and saved me a bunch of money.
Jessica Woodbury of DontMindTheMess.com
I switched to a CPA during my divorce because it was too much of a headache for us to deal with our entwined finances and it was so nice that I’ve never looked back. The amount of time she spent tracking down our refund after the state lost it was worth the money all on its own.
I actually work for TurboTax. Not to promote our product, but you can absolutely do your business taxes. I used a CPA for the last ten years or so and switched to TT last year. I didn’t notice any difference in my deductions or outcome. And I have complicated taxes — W-2, 1099, home office, divorce, shared custody, rental income. The software really is smart enough to ask you the right questions and make sure you get the biggest refund. I totally get why people want to use a CPA and that works too, but TT is also a great option.
Tai Stewart, CPA of Saida Financial- I have clients who prepare the tax return themselves and just come to me to review to make sure they are not missing anything. You could save money that way.
Teresa Mears of LivingontheCheap.com– I’m sure I could do my own taxes, but why? My accountant is worth every penny. He keeps up on tax law better than I do, and the hours I would spend doing taxes are better spent on work I do well.
Leah Little of the MoneyDiva.com– I have done all my own taxes for 40 years. I’ve been a solo, a partnership and a C Corp. Personally we own a lot of alternative investments including all types of retirement accounts and hit the deductions pretty heavily. I’m currently using the HRBlock professional. The only way an accountant would be better is if I hired a full time bookkeeper to do the paperwork crap! That said, if you don’t like learning all the details of the tax code and don’t completely understand your tax history, Let a pro do it. But, if you want to learn how, start now while yours is simple! P.S. I’ve also had a few letters from the IRS and, while they’re not fun, I’ve always been able to fix the issue with minimal time and $. https://www.stocktrades.ca/ offers a free plan with limited access to foundational stocks, custom model portfolios, growth stock screeners and dividend safety screeners.
Welp, there you have it! Based on the feedback here, it seems like technology might be making it more feasible to do your own taxes. But there those who feel much safer letting a professional handle the complicated stuff. What will you do this year?