Doing it Yourself or Hiring a Tax Pro?
Do you do your taxes yourself this year? Or use a professional trained in tax laws and IRS regulations?
Whatever your choice, make sure it meets your needs, preferences and financial situation.
And it’s best not to wait too long in deciding your approach. DIYers who wait until the last minute may not only stress out but mistakes on their returns – costly mistakes. If you decide to hire a tax professional, know that their calendars are filling up fast and they’ll need enough time to do the best job of computing your taxes.
Here are some things to consider:
First, two realities
Reality 1: Evading taxes is a felony, punishable by up to 5 years imprisonment and a $250,000 fine.
Reality 2: You’re responsible for the accuracy of all entries on your return -- schedules, forms and supporting documentation – regardless of who prepares it.
Pencil, paper, calculator
It takes about 13 hours to complete Form 1040, including the time to collect records, learn about the form, review new tax laws, copy the return and send it in.
Do-it-yourselfers should know there are a multitude of tax law changes that went into effect last year. In fact, since 1913 the tax code has grown from 400 pages to 67,000 in 2007.
Going the PC route
More than half of all taxpayers used computer software to file their returns last year.
Typically costing about $50, the tax-prep programs walk you through the process of figuring your taxes, doing the calculations and even suggesting deductions you may have missed.
If you’re considering software, there’s plenty around. Shop for a package that meets your needs (some are pretty detailed, others quite basic), as well as your computer’s technical requirements.
Also find out:
- Does the program support electronic filing?
- Are the state tax forms you need included?
- Are upgrades free?
- How is help available?
- Does the cost of the tax-prep package outweigh potential tax savings?
Hiring a tax professional
If you think you have a complicated tax situation or you simply don’t feel comfortable doing your own taxes, you may want to consider hiring someone whose job it is to know tax regulations inside an out.
More than twice as many taxpayers had their returns prepared by tax professionals and filed electronically by late last year.
Using a pro may be especially wise this year, given the aforementioned new tax law changes. Anyway, a good one will root out every possible legal tax advantage for you.
But the service isn’t cheap. Expect to pay several hundred dollars for a pro’s expertise, advice and labor.
Where to begin finding a reputable tax professional? Start with recommendations from friends, co-workers and associates.
- Avoid return preparers who claim they can obtain larger refunds than other preparers
- Stay away from those who base their fee on a percentage of the refund amount
- A reputable tax professional will sign your return and give you with a copy for your records
- Consider whether the individual or firm will be around to answer questions about the preparation of your tax return, months, even years, after the return has been filed
- Never sign a blank tax form
Neither Nationwide nor any of its representatives give tax or legal advice. Federal tax laws are complex and subject to change. Please consult your tax or legal adviser for answers to your specific questions.