Some jobs are great for the do-it-yourself person – oil changes, remodeling your RV, designing your website, etc. However, filing your income tax return isn’t one of them. Here are 6 reasons why you shouldn’t try to file your own taxes.
First, let’s talk about who should prepare their own return.
File Your Own Taxes
Who should prepare their own tax return?
When it comes to deciding whether to prepare your own tax return or not, there are two main considerations, comfort, and complexity.
A tax return with only a W-2 is usually simple enough to prepare on your own. Also, taxpayers without itemized deductions, investments or self-employment income might find filing their own tax return a straightforward process. With today’s software options, these simple returns are most definitely doable on your own.
However, if one of the above situations doesn’t fit your situation, then you might consider these 6 reasons why you shouldn’t try to file your own taxes.
Why You Shouldn’t Try to File Your Own Taxes
1. Taxes can be complicated
While some tax forms are streamlined and can be simple to fill out, there are over 72,000 pages of federal tax code. Plus, every year there are tax law changes. Who can say that they are familiar with all that code? The only people I know of are trained tax professionals such as enrolled agents, tax attorneys, and CPAs. Tax professionals specialize in learning and knowing the tax code. Continuing education classes are a requirement of the job in order to maintain licensing.
You might think that all the answers are online. However, online tax advice can be inaccurate, incomplete, or out of date. Isn’t your time better spent with family and friends? Gather those documents and turn them over to a professional to sort through the complicated tax code for you.
2. Risk of error
Tax return mistakes can be costly! You might be totally unaware that you missed a significant tax deduction because you didn’t know it existed. This is where a tax professional helps you. They are trained to find deductions and will work to minimize your tax liability. They also will help lower your chance of an audit or receiving an IRS notice in the mail.
While there are plenty of choices when it comes to tax filing software, you run the risk of answering something incorrectly. That can work against you because it will leave off deductions. It could also let you take deductions to which you aren’t entitled. Why run the risk of an audit? One significant tax deduction can pay for the services of a tax preparer.
What constitutes a complicated tax situation? Anyone with dependents, investments, or significant assets or charitable contributions, or you are self-employed. All these items have complicated tax rules around them. One mistake and you could pay big time.
3. Tax professional = advocate
A tax professional shouldn’t be a simple one and done transaction. Many tax preparers provide services well beyond tax return preparation. A good professional or enrolled agent can provide guidance and advice throughout the year.
They are someone you can call whenever your tax situation is about to change. If you are about to start a business, check-in with them. If you have questions about what you might owe for taxes throughout the year, then call your tax professional.
A good tax professional serves as an advocate for their clients. They are available year-round for questions, meetings and to go over numbers. Plus, if for some reason you should be audited, your tax professional will generally take part in the audit. They can even represent you before the IRS. This means they can also help explain and clarify any claimed deductions to the IRS. No one wants to face an audit alone and with a trained professional you won’t have to.
This brings us to the next reason why you shouldn’t try to file your own taxes, peace of mind.
4. Peace of mind
If the idea of entering numbers and understanding dependents and deductions makes you break out in a cold sweat, you might want to leave the preparation to a professional. Are you a risk-taker or would you rather play it safe?
This might be the biggest consideration for why you shouldn’t try to file your own taxes. You don’t want to lose sleep. You want to know your tax return was filed correctly and on time with all the right deductions and credits.
No stressing over numbers, forms, deductions, credits, etc. when you hire a tax professional.
5. Major life changes
Have you had a major life change in the past year? Did you move into an RV? Did you sell a home? Have a baby? Get married? Get divorced? Start a business? Work in multiple states?
I think you get the idea here. Having a major life change in a year is just one more reason why you shouldn’t try to file your own taxes.
All those events impact your tax return. At the very least, the first time you document a major life change you may want someone else handling it for you.
This includes starting a business. Do you truly understand all the deductions and write-offs available to you? Do you know where to deduct them all? Do they go on the business form or Form 1040? If you started a business this year then chances are you will want some input on how to handle that for taxes. This includes deductions for all those business expenses. Some deductions are audit red flags and having a professional help you will help mitigate the risk of an audit.
What about child tax credits? Do you qualify? Do you know what forms are needed to take the credits?
6. Time Savings
The IRS estimates the average person spends up to 11 hours doing all of the preparation work for the basic form 1040.
Would you rather spend 10-15 hours trying to understand the complexity of taxes or hire a professional and free up that time to do the things you enjoy?
Preparing a tax return does require your undivided attention particularly if you’d like to avoid those mistakes we talked about earlier. No multitasking here. That means no distraction from the kids, Netflix, YouTube or whatever else you have going on.
Wouldn’t it be so much easier to gather your tax documents and hand them off to the professional? That frees up those hours to spend as you please and you also won’t get frustrated over tax laws or tax forms.
Many of you choose the RV lifestyle for the freedom it offers. This freedom includes spending more quality time with your family and friends. Just one more reason why you shouldn’t try to file your own taxes.
If you need or want help, but can’t afford to pay someone, you might qualify to get free assistance through the Volunteer Income Tax Assistance or Tax Counseling for the Elderly programs. These are available to seniors or those meeting the income requirements. These special programs offer free tax preparation services from trained volunteers. Locate a free service provider near you using the IRS website.
Regardless of whether you file your own return or pay someone else to prepare the paperwork, tax returns are due on the same day. File your return or extension request along with making a tax payment by April 15. Otherwise, prepare to pay the IRS a late filing penalty.