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3 Good Reasons Not to Pay an Accountant to File Your Taxes

Tax time
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Apparently, Americans missed out on $1 billion last year by filing their own tax returns. Perhaps you've seen the commercials featuring a dramatic warship or football stadium representations of just how much cold, hard cash we squandered by taking our financial fate into our own hands. However, before these fear-mongering ads cause you to run headlong into the open arms of the nearest tax professional, let's discuss why it still makes sense to file your taxes yourself.

Warren Buffett certainly isn't rocking tax season with online software, but there are plenty of reasons why many of us probably should.

"The average American, unfortunately, doesn't have much in the way of investments," says Erin Al Essa, a freelance writer and former tax accountant. "These people whose applicable tax information is limited to W-2 wages, a few 1099s and basic deductions are typically better off doing their own taxes."

For taxpayers who have complicated investments or who own a business, Al Essa does recommend getting your taxes done by a professional.

1. Basic Taxes Are Simple to Do with Software

Gone are the days of picking up paper tax forms at the post office and diligently scrutinizing all the instructions to make sure you're not committing tax evasion. Technology has made the average taxpayer's financial dealings with Uncle Sam simple, thanks to software like TurboTax, TaxACT, FreeTaxUSA and H&R Block (HRB). And, all of those, plus many other commercial software options, are available free if you go through the IRS website -- if your income wasn't too high.

"Taxes are simply the story of a person's year, a story no one knows better than they do," says TurboTax certified public accountant Lisa Lewis. "And with TurboTax, people don't need any tax knowledge or expertise to do their own taxes and get them done right."

TurboTax and similar software walk you through the process of filing your taxes by asking simple questions such as, "Did you buy a house?" or "Did you have a baby?"

2. You Keep More of Your Hard-Earned Dollars in Your Pocket

According to a recent report from the National Society of Accountants, tax returns done by a tax professional cost an average of $273 for an itemized Form 1040 with a Schedule A and a state tax return.

"If you are one of the 60 million taxpayers with [a] simple tax situation," Lewis says, "you can prepare and e-file your taxes in as few as 10 minutes" with free tax software. Be warned: The Internal Revenue Service says it will take you longer.

The majority of tax-preparation software providers offer free federal returns and often charge less than $40 for state returns, which means average taxpayers could save upwards of $200 simply by filing their own taxes.

3. Tax Software Still Catches Your Eligible Tax Credits

To get the largest possible refund, taxpayers must capitalize on every tax credit and deduction they are eligible for. Some may be skeptical that tax preparation software will find them all, which sends them running off to an accountant.

Lewis says that regardless of your tax preparation method, you should still get the same refund.

"TurboTax is always up to date with current tax and health care laws," she says. Similar software will also ask some simple questions to determine if you're eligible for tax credits. But even if your software and your accountant can determine your eligibility, you should still be aware of those tax credits yourself.

Throwing Money at the Problem

"Obviously," says Al Essa, "if you really hate prepping taxes, you can always hire someone, no matter how simple the return. It's a matter of priorities -- save the cash and spend the time, or spend the cash and save the time."

If filing your taxes with software will truly take you 10 minutes to an hour, perhaps it's worth pocketing the $200 or more you'll save by doing them without an accountant -- or at least seeing if you're eligible for free tax help.

Erin Lowry writes for DailyFinance on issues relating to millennials, money and personal finance. She's also the blogger behind Broke Millennial, where her sarcastic sense of humor entertains and educates her peers.

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TurboTax Articles

Cities with the Lowest Tax Rates

The total amount of tax you pay reaches far beyond what you owe the federal government. Depending on where you live, most likely you're required to pay additional taxes, including property and sales tax. The disparity between the amount of tax you pay in a low-tax city and that in a high-tax city can be dramatic. Living in any of these 10 cities could save you a bundle, although the exact amount may fluctuate based on your income and lifestyle choices.

Cities with the Highest Tax Rates

Much ado is made in the press about federal tax brackets, but cities can carry a tax bite of their own. Even if you live in a state that has no income tax, your city may levy a variety of taxes that could eat away the entire benefit of living in an income tax-free state, including property taxes, sales taxes and auto taxes. Consider all the costs before you move to one of these cities, and understand that rates may change based on your family's income level.

Great Ways to Get Charitable Tax Deductions

Generally, when you give money to a charity, you can use the amount of that donation as a deduction on your tax return. However, not all charities qualify as tax-deductible organizations. While there are many types of charities, they must all meet certain criteria to be classified by the IRS as tax-deductible organizations. There are legitimate tax-deductible organizations in many popular categories, such as those listed below.

A Freelancer's Guide to Taxes

Freelancing certainly has its benefits, but it can result in a few complications come tax time. The Internal Revenue Service considers freelancers to be self-employed, so if you earn income as a freelancer you must file your taxes as a business owner. While you can take additional deductions if you are self-employed, you'll also face additional taxes in the form of the self-employment tax. Here are things to consider as a freelancer when filing your taxes.

Tax Deductions for Voluntary Interest Payments on Student Loans

Most taxpayers who pay interest on student loans can take a tax deduction for the expense ? and you can do this regardless of whether you itemize tax deductions on your return. The rules for claiming the deduction are the same whether the interest payments were required or voluntary.

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Had to go back to our CPA and correct several entries.

Saved a good group on taxes.

Just like almost everyone else, they don't pay attention, listen,
or understand.

Next year, I'll do my own again.

March 11 2015 at 9:41 PM Report abuse rate up rate down Reply

Turbo tax offers "audit insurance". I have the contract to do the audits where I live.. Of the hundreds of audits I have done only one was right. Thanks for the money, self filers.

March 11 2015 at 3:38 PM Report abuse rate up rate down Reply

Who does Al Sharpton use.

March 11 2015 at 1:59 PM Report abuse +1 rate up rate down Reply
2 replies to democrap2's comment

Either toilet paper or his right hand sleeve.

March 11 2015 at 10:24 PM Report abuse rate up rate down Reply


March 12 2015 at 12:26 AM Report abuse rate up rate down Reply

I only hired two certified tax preparers in my lifetime, and both of them screwed up my returns. During the last ten years, my brother and I have been sharing the TurboTax program (which seems the best way to go now).

March 11 2015 at 10:35 AM Report abuse rate up rate down Reply
Rani Love

So I went to a CPA to do my taxes and he charged me $450.00 for a simple w-2 schedule A. I came home and did the same on a turbo tax software I got in my email and the figures came out the same! That cpa ripped me off! I went ahead and filed with my turbo tax software too. How do I get out of this robbing CPA situation!? I'm so angry and can't believe he did that to me. I filed my own a day after he filed. I don't want to use his services. He spent a whole 15 mins entering information. I'm just shocked he has almost charged me $500 for hardly doing anything!

February 01 2015 at 2:09 PM Report abuse +1 rate up rate down Reply

Just this week, I had someone come in the office with "just W-2s". Too bad for the last 4 years they could have taken the education credits they deserved, but had no clue about (and their do it yourself software never asked them about). Saving $100s ended up almost costing them $1000s, but you go ahead and trust that your do it yourself tax software is going to ask the right question (or you're going to understand what it wants and answer correctly). I love being able to charge extra for dealing with the IRS when it doesn't. Accountants don't do 4 years of college for nothing.

August 10 2014 at 1:33 AM Report abuse rate up rate down Reply

I've never purchased a tax program and the last time I went to a professional, it took only a minute or two to run my standard return on their program, but they still expected to collect their $125 minimum fee for my $62 refund. I turned them down and have done my final returns free on-line ever since. (Since my state provides a free on-line program, I never need to buy a state return.)

I do my return by hand before submitting it through a program, because I trust me and my calculator more than any program. I used this system a few years ago when I omitted a large one-time sum from my reportable income. The 1040 instructions uncharacteristically said "most" and "usually" in discussing that particular income, yet did not direct me to another site for details. After a routine search of the IRS site without a single hit, I became determined to find out under what circumstances the money was not taxable. It took hours, using every description of the subject I could think of, before a single very obscure reference came up. The document was very technical but surprisingly, relieved me of all tax obligations on that particular money.

I figured I'd be audited, so copied the document for future reference. Two years later, the audit letter arrived. I disputed their findings, submitting their own document as justification, and won. But I bet that few tax professionals would look for that document because they think they already know the answer.

February 11 2014 at 7:58 AM Report abuse rate up rate down Reply
1 reply to SuKDu's comment

So you spent hours doing research, to save $125??? How much could you have made if you worked those hours instead?

August 10 2014 at 1:22 AM Report abuse rate up rate down Reply

Quick. Someone give me the book, brain surgery for dummies.

February 10 2014 at 11:47 PM Report abuse -1 rate up rate down Reply

turbo tax is the program used by professionals. I know of two people hired by Jackson Hewitt to do taxes who had no accounting degree. Most tax professionals preparing taxes make $10 an hour putting the numbers into turbo tax. they are not accountants

February 10 2014 at 9:27 PM Report abuse +1 rate up rate down Reply

And if you get that dreaded notice from the IRS, who do you call? TurboTax? You answer the questions in Turbo, but does everyone know what the question really means? Most don't. 1040 EZ don't go for 260. Story must be written by someone who owns stock in HR Block or Intuit and wants to sell their software.

February 10 2014 at 8:42 PM Report abuse rate up rate down Reply
1 reply to dbear4u2's comment

You call them ding-dong.

March 11 2015 at 10:25 PM Report abuse rate up rate down Reply