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Should You Do Your Own Taxes?

The year is almost over. Tax season is just starting. As you gather your documentation, pull up the IRS web site, and prepare to fill out your tax return, take a few minutes to consider your situation and determine whether or not you might have someone else prepare your tax return.

Deciding to Turn Tax Prep Over to the Accountant

A few years ago, I switched from being a sole proprietor to setting up as a LLC. We’ve also, over the years, added investments and retirement accounts to our financial establishment. As a result, our taxes have become increasingly complicated. Back in the day, I did our taxes, filling out the 1040, the Schedule C and all the other Schedules and Forms required of our situation. But once we added the LLC, and I realized I would need to fill out a Form 1065 and a Schedule K-1 to go along with our other income tax forms, my heart sank.

Am I capable of doing it myself? Sure. Do I want to? Certainly not.

As our financial establishment began increasing in complexity, and because tax laws change each year, it became time consuming, even with the help of tax prep software, to put together my tax return. I decided to give the accountant a try. He immediately found three tax deductions and one credit that I had missed — even with the help of tax software.

On top of that, he made everything go much smoother. He was able to prepare my return fairly quickly, while I sat there, and he ran a few different scenarios that we could try with my taxes in order to see what might work best. The accountant does cost about $200 more than the home and business (plus state filing) tax prep software, but he more than makes up for it with the tax savings. And it saves me time and frustration.

What You Need to Bring to Your Accountant

The biggest hassle when figuring your taxes is gathering all the documentation for your tax deductions and credits, as well as for income. However, if you do this throughout the year, it really doesn’t take too long. I keep a separate folder for all my tax-related receipts, and my personal finance software helps keep track of everything else. I keep all of my 1099s, and the forms mailed in from my mortgage lender and my husband’s school, in a folder to take in with me. It’s all ready to go, so it doesn’t take very long to assemble.

Some might say that, since it doesn’t take me long to get together my documentation, I might as well do my taxes on my own, since the hardest part is over. But, for me, that’s not the hard part. I hate taking the time to fill out the forms, and I hate comparing the instructions from the IRS with what I’ve done, as well as double checking the tax software’s work.

Turning it over to a professional just provides me with a little more peace of mind, and it means that it’s one less thing that I have to do. And, in the grand scheme of things, having that one less thing to do can mean a lot more than saving a couple hundred bucks.