Tax time is stressful enough without worrying about how to file your taxes. Choosing whether or not to have your taxes prepared by a professional, or doing it yourself using tax software is a big decision. Both options have advantages and disadvantages.
Paying someone else to do your taxes is quite a bit more expensive. A simple tax preparation for an individual will usually cost at least $100. More complicated tax situations, such as self-employed individuals, real estate investors, or those with substantial assets and income, can cost quite a bit more - about $250 - $500.
Using a professional tax preparer or accountant also saves time. Instead of sitting for hours - or possibly days - in front of a computer yourself, all of your tax information can be dropped off with the accountant. They will call you if they have any questions and notify you when your taxes are done.
Most accountants and tax preparers are insured in case they make a mistake on your tax return. If they make a mistake, you don't have to pay for it. That's a nice peace of mind to have.
The cost of hiring an accountant to file a tax return is what turns most people away from the idea. Why pay hundreds of dollars, when do it yourself tax software costs so much less? Many people also just prefer being able to keep control of their financial affairs.
Another potential disadvantage is that, as one might imagine, tax preparers are extremely busy during tax time. Sometimes they may not have the time to properly prepare them. Working on your return yourself ensures that you spend the right amount of time and attention on your taxes. After all, your taxes are usually the only ones you will be filing.
Most tax software is very easy to learn. It can be learned quite quickly by just about anyone who knows computers. There is no adding or calculators involved. The software walks you through all of the complicated forms using an intuitive question-and-answer format, and does any math needed right away, which leaves less chance that you'll make a mistake on your tax return.
Tax software, in general, is usually considered to be for the average person. If you run a small business, are self-employed, or have a difficult and complicated tax situation, it can miss certain tax laws, deductions, and credits that a tax preparer would know about. Missing some of these could cause you to lose money or overpay – and who wants to give extra money to the IRS?
The IRS has a reputation for making some laws quite sneaky and a has reputation for changing, or making new laws - without informing the general public. Some inferior tax software solutions, especially outdated software, can miss many of the newer laws. Make sure you choose software from a reputable brand.