You pay someone to change the oil in your car. You get your nails done once a week. You have a landscaper to keep your lawn tidy…should you outsource your taxes too? Having someone else fill out your IRS tax forms for you sounds like a no-brainer, since it’s not one of the must enjoyable task. Of course, why wouldn’t you want someone else to do your taxes for you? But let’s consider this carefully. There’s a pretty hefty fee for such a service, and while you still may decide it’s worth the price, it’s important to know exactly what you’re paying for.
Many IRS Tax Forms are Very Simple
You see, filling out the IRS tax forms isn’t the real problem here. It’s knowing which forms you need in order to get the maximum benefit. The idea is to get as many deductions and tax credits as you can so that your tax liability is as small as legally possible.
A tax professional can listen to your financial story and ask questions so he or she gets an idea of your situation. Based on discussions, the accountant should know what IRS tax forms would be suitable for you. Once the correct tax forms are established, it’s usually not too difficult to fill them out.
Tax prop software asks questions too: you click through an interview that guides you to fill out the correct IRS tax forms based on the answers you give. A typical question might be, “did you buy a home this year?” and if you answer “yes” then the software diverts your interview to another series of questions that may or may not lead to having you take a deduction for home mortgage interest.
How Much Are You Willing to Pay?
Maybe you can justify paying to have your oil changed- you don’t have a hole in your garage in which you can lower yourself to get at the oil and empty it out. It’s a dirty job, and it’s not incredibly expensive to take your car to Jiffy Lube once in a while.
Maybe you can also justify having your nails professionally manicured once a week- also not that expensive considering one appointment at a time. $25? That’s a pretty average cost of a manicure. And Lord knows it’s hard to do your own nails and have them come out as good.
But having a pro do your taxes will be hundreds of dollars, sometimes even thousands if you have a complex financial world or you own your own business. And there’s a chance you could achieve the same result by using free tax software that’s available online. Doesn’t that worry you a bit? You could save hundreds of dollars – probably thousands over the years- by doing it yourself?
How much are you willing to pay for the convenience of having someone else do your taxes? The IRS estimates it’s about 13 hours to fill out the 1040 form. The 1040 is the longest form, and the 1040 EZ is the shortest. The IRS also states that the average cost of having a pro do your taxes on the 1040 form is $270. Would you pay $270 in order to have 13 hours freed up? That’s totally up to you of course. But in the back of your mind that $270 could be spent in so many other ways…it’s tempting for most of us to try it ourselves.
The Perfect Solution to DIY Taxes
That brings us tot he perfect solution: have a pro do it once, then do it yourself the following years. Then you’ll be more confident you’ve received all the tax credits and deductions you are entitle to, but you’ll also be saving some serious money over the years.