Should You Do Your Own Taxes?

With the New Year approaching, another important date is fairly close by.  Tax day may seem like it’s very far away.  After all, you have something like three and a half months to do your taxes, and even then you can file for an extension.

But tax season comes around before you know it, and taxes are nothing to be ignored.  They are serious business.  If you lie on your taxes and get caught, you’ll get audited, and if you don’t pay your taxes, you will go to prison.  Simple as that.  Taxes are something to be taken seriously.

But taxes aren’t simple either.  It takes literally years to master each state’s tax codes because there are so many little details and intricacies to understand.  Obviously not everyone has seriously complicated taxes, but simple taxes simply don’t exist.

But taxes have to be done; there are no two ways about it.  The question becomes how should you do your taxes?

There are a few different ways to approach this task: you can do your own taxes, you can go to a tax preparation company, or you can have an accountant prepare your taxes.  Each method has different benefits and drawbacks and can even have different results.

Doing Your Own Taxes

The main benefit of doing your own taxes is that it is free.  And if your taxes and general finances are simple, the doing your own taxes is a very viable option.

Be sure to remember that you have two different types of taxes to file: state and federal.

Now just because your finances are simple doesn’t mean that your taxes will be.  Even figuring out what form you should be filling out requires knowing a lot of information.  The problem with doing your own taxes is that it is extremely easy to make a mistake.

Going to a Tax Preparation Company

Tax prep companies can be great.  They are convenient because they are everywhere.  Companies like H and R Block have many different locations throughout the country because of demand.

Your taxes are done quickly which is very nice.  But at companies like these, remember that the people doing your taxes are not actual CPAs but employees of these companies, trained by these companies, which means that your taxes might not necessarily be done professionally, so your return might not be as big as it could be.

After all, only IRS workers and accountants know ALL the rules (or at least most of them).

Going to a CPA

This is the ultimate option.  Getting a CPA is the trustiest way to get your taxes done well (but remember that CPAs are only human and are also capable of making mistakes).  CPAs are trained and rigorously tested in this very skill which translates to more thorough taxes.

The drawbacks to using a CPA are twofold: they are the most expensive option and it can be difficult finding a CPA.

However, the money that they get you back and the potential headaches that you save generally overrules the money that you pay.  And the best way to find a good CPA is through referrals, so ask around and you’ll be sure to find a great one.

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