Should You Prepare Your Own Taxes?

I’ve wrestled with whether or not to prepare my own taxes in the past quite a bit.  While I felt competent to manage my finances from budgeting to paying my own home taxes I’ve always had a little bit of concern for preparing my own tax return.

Why?  I’m not a tax professional!  Primarily, I was afraid I was going to make a mistake somewhere along the way, get audited and have to pay a penalty.  I suppose the other reason was the convenience in taking my paperwork to a professional and trusting they would take care of everything for me.  All I had to do was collect my paperwork, decide what day I would visit the tax professional and bingo, my taxes were done!

But a few years ago I made the decision to do my own taxes.  Honestly, it was sort of on a whim when I decided to sign up for the online version of Turbo Tax.  I found the system so easy to use, with it prompting me for information and asking questions.  I haven’t turned back for the last few years.

So, should you prepare your own taxes?  How do you decide?  Asking yourself 3 simple questions may help you determine whether or not this is the right approach for you.

Do you have the time?

Getting organized and preparing your own taxes does take some time.  You need to collect all of the tax documents required for filing and then block off some time to enter the information into a software program.  Once you’ve done this a few times you’ll know how to organize your information and have everything you need at your finger tips, but it will require a time investment either way.

Do you want to pay?

Still leaning towards using a tax professional?  With any professional service you’re going to pay.  The price range is wide with tax preparation.  In the past, I’ve paid around $100 for a simple return at H&R Block, but some returns can get quite complicated and you’ll definitely pay for the expertise. Note: your tax preparation fees may be eligible for deduction the next time you file if you itemize your deductions.

Do you have a simple return?

An important question is to ask yourself if you have a simple return.  How do you know?  Basically, a simple return may be seen as someone who is taking the standard deduction, doesn’t itemize and their income is from one employer and interest from just a few places.  But, this is very simple.  I think a simple return could also be someone who itemizes their deductions, but the other criteria may still hold true.  Ultimately, the decision is yours, but it might not hurt to dive into a software program to find out how straight forward the filing is for you.

Final advice

With that being said, if you’re making the move to doing your own taxes this year for the first time you might consider having them double checked by a CPA or from a company such as H&R Block.  You can find a Dave Ramsey endorse tax professional in your area.

This may be a good idea if you’re feeling any anxiety at all over your tax preparation and also find that you owe or expect to receive a significant refund.  Turbo Tax, in particular, does a lot in the way to help you avoid making mistakes.  However, remember the responsibility to file accurately is still yours.

How do you feel about preparing your own taxes this year?