I’ve stated before that I have a day job that involved corporate finance, and that I dabble as a personal finance blogger by night. That being said, each and every year I find myself contemplating whether or not to prepare my own taxes. Even with my schooling and professional expertise I am not a tax oracle. To make things more difficult the tax laws change every year, complicating the situation further. Below I want to list some basic pro’s and con’s you should consider before jumping the gun either way.
When deciding to prepare your own taxes I find it helpful to answer one very important question…”are you comfortable putting your name on the final product?” This may not seem like a big deal, but the person who signs the preparation line is the one responsible for explaining the final product if you are ever audited. If you hire a CPA to prepare and sign off on the taxes, then they are the one who is responsible for providing the backup to the auditor. If you feel that confidently in your tax preparation skills then perhaps this isn’t an issue.
I would venture to guess that cost plays the biggest factor in most peoples decision to self prepare or outsource their taxes. A reputable CPA worth their weight in gold is not going to be cheap, at the same time it should give you total peace of mind. Whereas tax software is often times a fraction of the price and they are getting to be a lot more self intuitive. There are forums for questions, and with additional fees you can have a virtual CPA review your file after you are done. I consider cost to be important when you consider the complexity of your taxes. If you are a single taxpayer who rents an apartment then you can most likely file a 1040EZ, in which case you can find cheap software that will be just as reliable as any highly paid CPA. On the other hand, you could have a multitude of investments, credits, and possible deductions. If this is the case it might benefit you more to spend some additional money on a CPA who will make sure you receive every last benefit you are entitled to.
Lastly, if you are currently using a financial planner of any kind, I would almost urge you to find a CPA who performs the same work. A CPA who acts as both a tax planner and financial planner can align similar goals, in which case you can limit your overall fees that you are paying and be better off in the long run.