- Days left

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

×
Tax time
Getty Images
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.


More from Erin Lowry


Increase your money and finance knowledge from home

Building Credit from Scratch

Start building credit...now.

View Course »

Advice for Recent College Grads

Prepare yourself for the "real world".

View Course »

TurboTax Articles

What is IRS Form 8824: Like-Kind Exchange

Ordinarily, when you sell something for more than what you paid to get it, you have a capital gain; when you sell it for less than what you paid, you have a capital loss. Both can affect your taxes. But if you immediately buy a similar property to replace the one you sold, the tax code calls that a "like-kind exchange," and it lets you delay some or all of the tax effects. The Internal Revenue Service (IRS) uses Form 8824 for like-kind exchanges.

What are ABLE Accounts? Tax Benefits Explained

Achieving a Better Life Experience (ABLE) accounts allow the families of disabled young people to set aside money for their care in a way that earns special tax benefits. ABLE accounts work much like the so-called 529 accounts that families can use to save money for education; in fact, an ABLE account is really a special kind of 529.

What is IRS Form 8829: Expenses for Business Use of Your Home

One of the many benefits of working at home is that you can deduct legitimate expenses from your taxes. The downside is that since home office tax deductions are so easily abused, the Internal Revenue Service (IRS) tends to scrutinize them more closely than other parts of your tax return. However, if you are able to substantiate your home office deductions, you shouldn't be afraid to claim them. IRS Form 8829 helps you determine what you can and cannot claim.

What is IRS Form 8859: Carryforward of D.C. First-Time Homebuyer Credit

Form 8859 is a tax form that will never be used by the majority of taxpayers. However, if you live in the District of Columbia (D.C.), it could be the key to saving thousands of dollars on your taxes. While many first-time home purchasers in D.C. are entitled to a federal tax credit, Form 8859 calculates the amount of carry-forward credit you can use in future years, not the amount of your initial tax credit.

What is IRS Form 8379: Injured Spouse Allocation

The Internal Revenue Service (IRS) has the power to seize income tax refunds when a taxpayer owes certain debts, such as unpaid taxes or overdue child support. Sometimes, a married couple's joint tax refund will be seized because of a debt for which only one spouse is responsible. When that happens, the other spouse is said to be "injured" and can file Form 8379 to get at least some of the refund.