Considering whether to do your own taxes or hire a professional? I’ve always done mine and encourage others to do the same. Every year, some are skeptical about spending a few hours learning and optimizing their finances to legally minimize taxes. But really, a part-time tax preparer earning $375 from my return isn’t likely to know my finances better than I do. A CPA charging $1,000? Maybe, but after 12 years of doing my own taxes, I’ve learned a lot. Frankly, the only way a CPA could save me more would be by bending the rules, which isn’t something I’m willing to do.
Why You Should Consider Doing Your Own Taxes:
1. You Care More About Your Money: No one cares about your money more than you do. A tax preparer has dozens of clients and tight deadlines. They’re not going to pore over the details of your finances like you would. With today’s sophisticated tax software, anyone can input their documents and get through the process with ease.
2. Testing Scenarios: One of the best parts about doing your own taxes is the ability to create “what-if” scenarios. Want to know how different income levels or deductions affect your tax liability? You can test it out yourself without waiting on someone else.
3. Goal Setting: When you handle your taxes, you set personal benchmarks. Maybe you want to keep your federal taxes below $40,000 or find the best way to balance different types of income to optimize your tax return. Doing it yourself helps you tailor your financial strategies to meet these goals.
4. Cost Reduction: Directly inputting your financial numbers makes you acutely aware of where your money goes. This tangible interaction with your finances often motivates you to find ways to cut down on unnecessary expenses.
5. Increased Knowledge: Doing your own taxes is educational. It equips you with the knowledge to make better financial decisions year-round, not just at tax time.
6. Time Savings: Initially, setting up your tax file takes time, but once you’ve got it, updating with annual information is quick and easy. Plus, you skip the back-and-forth with tax preparers, scheduling conflicts, and travel time for appointments.
7. Monetary Savings: Tax software is much cheaper than hiring a CPA. For a relatively straightforward return, spending $49.99 on software beats paying $375 or more to a professional. Plus, the software checks for common errors as you go.
8. Privacy: If you value your financial privacy, doing your own taxes ensures that the details of your financial life aren’t floating around an accountant’s office where multiple people might access them.
If you’re new to this, maybe have a professional handle your taxes once while you observe and ask questions. This can be a great learning experience. After that, you might feel confident enough to take over and do it yourself. Each year, tax software like TurboTax or H&R Block makes the process easier, saving previous data and guiding you through each step.
Overall, while there’s a learning curve, the benefits of handling your own taxes—from financial savings to a better understanding of your finances—are worth the effort for many people.
