When it comes to filing taxes, many Americans seek the help of a tax professional, while others go for a do-it-yourself approach. In many cases, taxes are simple enough to file on your own on paper or with the help of DIY tax preparation software. Filing by paper is free, while online services often charge moderate fees depending on your financial situation. Those earning less than $69,000 per year can also take advantage of the Federal Free File program, which allows them to file taxes for free online.
In more complicated cases, a professional will help guide you through the process to make sure that you report your financial information accurately and take advantage of any possible tax breaks and deductions on offer. While they can sometimes be pricey, tax preparation services are a good option for tricky tax situations and for those who don’t have the time or know-how to tackle tax preparation themselves.
Ultimately, the decision of whether to file a tax return on your own or to seek the help of a professional often comes down to personal preference. If you have a simple tax situation or are good with numbers, it’s usually not too difficult to prepare taxes on your own. If you’d rather save time and energy, or if you have a more complicated tax return, it’s often a good idea to seek professional help.
Table of Contents
- 1 Taking a Look at Tax Preparation Services
- 2 Doing Your Own Taxes
- 3 Should You Use a Tax Preparer or File on Your Own?
- 4 Essential Tips for Tax Filers
Taking a Look at Tax Preparation Services
If you’re looking for help preparing your taxes, it’s a good idea to understand exactly what services tax preparers offer and how much they might cost.
What Is a Tax Preparer?
A tax preparer is someone who specializes in helping people prepare and file their taxes. They often have advanced degrees in accounting or finance and are extremely knowledgeable concerning tax laws and procedures. You can seek out the help of an individual tax preparer or accountant to prepare your taxes, or employ the services of a national chain such as H&R Block or Jackson Hewitt.
Tax Preparer Liability
One of the major advantages of using a tax preparer is that if they make a mistake, they are generally the ones who are held liable. This would be especially helpful in case you are audited, or if you have a complicated tax return. Using a tax preparation service will help you to protect yourself against risk and prevent any potential errors.
How Much Do Tax Preparers Charge?
The cost of tax preparation services can vary depending on the provider and the complexity of your return. According to CBS, the average cost to prepare a simple state and federal tax return is $176, while for more complicated returns the average can be as high as $457.
If you need to file additional forms for your tax return, are self-employed or own a small business, or have experienced a significant life event such as divorce, marriage, or the purchase or sale of a house, the services of a tax professional are usually pricier. Like many other expenses, it also costs more to file your taxes in major cities than it does in more rural areas.
Doing Your Own Taxes
There are a variety of reasons why you might choose to file your taxes on your own. In many cases, your financial situation may be simple enough that filing state and federal taxes is a breeze. Even if you have a slightly more complicated situation, with a little time, effort, and financial know-how, you can easily file your taxes for yourself.
One of the primary benefits of filing taxes on your own is that it’s much less expensive than using a tax preparation service. In some situations, it may even be free. Filing your own taxes will also help you to elevate your financial awareness and increase your understanding of your own financial situation.
E-Filing vs. Paper Filing
If you do decide to file your own taxes, you can either fill out the paper forms the old-fashioned way or use an online DIY tax preparation service. While paper filing is free, it’s generally less convenient and less secure than filing online. Filing on paper also means it may take the IRS longer to process your refund. All that said, if you decide to go the route of paper filing there’s plenty of information on the IRS website to help you along the way.
Electronic filing is usually faster and more secure. If you decide to file your taxes online, there are a variety of different low-cost e-file options available, including FreeTaxUSA, Credit Karma Tax, and H&R Block.
These services often provide guidance and helpful hints while walking you through the tax preparation process, enabling you to take advantage of any applicable deductions and tax credits in order to make the most of your tax return. Be careful, though — some popular e-file services, such as TurboTax, may use creative loopholes to funnel you into the paid version of their e-file tax software.
While these services are generally affordable, the cost can add up if you’re dealing with special tax situations such as self-employment, investments, or property ownership.
If you make under $69,000 per year, you’re eligible to file your taxes for free using the federal Free File program, even if you have special circumstances that necessitate additional forms.
Should You Use a Tax Preparer or File on Your Own?
When it comes to deciding how to file your taxes, in many cases it’s a matter of personal preference. Some people enjoy taking a hands-on approach with their finances, while others prefer to let a professional handle it.
Using a Tax Preparer Pros
- You’re protected against liability in the case of an audit or mistake when filing.
- Qualified tax preparers can help guide you through complicated returns.
- You’ll save the time and effort required to prepare taxes on your own.
Using a Tax Preparer Cons
- Tax preparers are usually more expensive.
- You won’t learn as much about your own finances.
- Using a tax preparer may not be necessary for many simple tax returns.
Filing Your Own Taxes Pros
- Filing your own taxes can save you money.
- Many people are even eligible to file for free.
- Filing your own taxes helps you to gain a better understanding of your finances.
Filing Your Own Taxes Cons
- Filing your own taxes can be confusing and time-consuming.
- You’ll be liable for any mistakes you make when filing your own taxes.
- Special tax situations may require the knowledge of a professional.
Essential Tips for Tax Filers
Regardless of the route you take, there are a few strategies that will help you streamline the tax filing process and minimize potential errors.
- Get all of your documents together in one place, including any W2s and 1099s for the income you’ve earned throughout the past year.
- Be aware of any tax deductions you may be eligible for, including deductions for dependents, educational expenses, and home office operations.
- If you’re self-employed or have a side hustle, be sure to set money aside throughout the year for self-employment taxes.
- Plan to file your taxes well in advance of the deadline to give yourself time in case you run into any issues and to help prevent tax ID theft.
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