What’s the Best Way to Do Your Taxes?
Taxes are intimidating. It’s a stressful time of year for everyone. “How do I get started?” you might ask.
Well let this tax preparer lay out your options for you so you can decide.
Tax Preparation Methods
There are three main ways to do your taxes.
- Fill out the forms on paper and mail it it
- Find a tax software to help you prepare your taxes
- Find someone to do your taxes for you
While filing your taxes on paper is a guaranteed free option, I would never advise anyone to do this. Assuming you have a good grasp of the tax law and how to apply it to your personal situation, there are still lots of complicated mathematical calculations that go into preparing your taxes. Even highly-experienced tax pros like myself are wary of relying on our own math. It’s so easy to make a mistake this way
A better do-it-yourself option is to use tax software. These software providers eliminate the risk of doing the math wrong but are only accurate if you enter everything correctly. Tax software companies make it easier and easier to file your tax return by phrasing everything in simple terms that non-tax preparers will understand.
Many software companies also offer free options. They are typically limited to simpler returns and have an income limit to go with it, usually around $69,000.
Or you can find someone to do your taxes for you. There are plenty of options when it comes to getting a tax preparer. Make sure you find a reputable preparer you can trust if you go with this route
Related: How to Choose a Tax Preparer
Here what you should consider when deciding how to do your taxes.
How Much Time Do You Have?
According to the IRS, taxpayers should expect to spend 11 hours on average to prepare your own tax return. And you can add on some extra time for each state tax return you’ll need to file
The time can jump up to 19 hours for people who are self-employed. If you don’t have a business to worry about it could decrease to 6 or 7 hours.
If you’re looking to save time, you might want to lean towards finding a tax preparer.
How Much Money Do You Want to Spend?
Doing your taxes for free sounds great. Who doesn’t love saving money. The old pen and paper method is free. But is it worth the headache?
If money isn’t an issue and you have better things to do with your time, a tax preparer can handle everything for you. Just drop off all your documents and they’ll do the rest. But it can come with a heavy price tag. According to a 2019 survey done by the National Society of Accountants, the average price for a tax return is $294.
Using a tax software to do your taxes can be a happy medium. They usually come with a bit of a fee, hovering around $20 – $60. But can save you the hassle of figuring everything out yourself. Just punch in the numbers on your forms, or even take a picture of the documents you have, and the software will do all the math for you.
How Complicated are Your Taxes?
Easy – If your taxes consist of just your W-2 from your only job and that’s it, your tax return is easy. It would be a waste of money to let a tax preparer charge you hundreds of dollars for that. Odds are you can definitely do-it-yourself. You might even be able to skip the software if you’re feeling confident in your reading and math skills.
Somewhat Complicated – Many people have more than just a W-2 to worry about. The more forms you have to file, the harder it is to do your taxes on paper. But still the average tax return isn’t all that complicated. Using a tax software is probably the way to go. You’ll need to punch in some information into the computer, but the software will walk you through it, and often offer live support if you get stuck.
Hard – If you’re self-employed or an independent contractor, have sold lots of stocks, have a great deal of expenses to itemize, or had some major life change last year – you may need some guidance from a tax preparer. While some tax software like TurboTax Live offer you the ability to video chat with an actual tax preparer to help you through some sticky situations, you may need to see someone in-person to really hammer down all the details.
To calm your nerves, check out your software provider or your tax preparer’s audit protection policies. They may be able to help you out if the IRS comes knocking.
Do You Need to be in Control?
There’s nothing wrong with wanting to be in control of your taxes. Tax preparers love it when their clients are engaged and want to know what’s going on. But if you’re the type of control freak who needs to micro-manage everything even when you’ve hired a professional, maybe it’s best to stick to a DIY option.
If you’re the kind of person who likes to be involved but don’t want to do all the work yourself, use a tax software to do your taxes.
Or maybe you’d rather be completely hands-off in the process. Find a tax pro you can trust. They don’t have a problem with handling everything. But make sure you answer any questions they may have for you otherwise your taxes will never get done.
Moral of the Story
There’s a lot that goes into figuring out what’s right for you.
But remember: no matter what way you choose, whether you do it yourself or hire a professional, you are ultimately responsible for the information that is included on your tax return. Someone else might do the work for you, but you’re the one on the hook.