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

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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 CPA 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, 2013 tax returns done by a tax professional cost an average of $261 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 TurboTax Federal Free Edition."

While the IRS says the average taxpayer filing a 1040EZ is likely to spend four hours on the process, using online software reduces the amount of time involved.

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

Al Essa suggests checking your eligibility for the Saver's Credit, which allows low- to mid-income earners contributing to retirement to take 10, 20 or 50 percent off up to $2,000 of their contributions (or $4,000 if taxpayers are married filing jointly).

Lewis recommends researching the tax credits related to your dependents and your education, such as the child tax credit of $1,000 or the American Opportunity Tax Credit if you, your spouse or a dependent are in college.

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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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 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 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

Taxes are not that difficult for the average person with a brain, an organized tax file and hour or two to document w-2 income, a handful of interest and dividend income and deductions of home mortgage interest/property taxes and IRA contributions.

February 10 2014 at 7:06 PM Report abuse +3 rate up rate down Reply
Jerry Randklev

You usually get what you pay for. Now, that said, I was shocked the last time I had my taxes done by an accountant. He was using the professional version of the same Turbo-Tax program that I had been using. His results were the same as mine. If you are fairly finance knowledgable -- the program will work fine for you. If you really don't have a clue, probably best to pay somebody else.

February 10 2014 at 3:50 PM Report abuse +4 rate up rate down Reply

My response may be considered a bit biased because I am an Enrolled Agent, however I must say in defense of professionals, the 1040EZ may take a reasonably intelligent and educated taxpayer only an hour to complete in some cases, but it is not going to save them $200 doing it by themselves. That is the simplest and cheapest return and most tax prep places have a low price for that form IF one qualifies for it. The biggest misconception is that "doing" one's taxes is simply a matter of data entry of numbers into a program and answering a few questions because maybe it looks like that but it is much more complex than that. The knowledge and theory behind tax law and the regulations play a larger part in tax return preparation. People can get into all sorts of conundrums or miss out on tax saving opportunities with any level of complexity simply because they have not studied the tax code, court cases, are not familiar with regulations and the grey areas of taxation. I am not a champion of scare tactics, and people have the right to do what they want, but they may indeed be making errors that they don't even know they are making, or forgoing tax benefits they aren't aware they qualify for when taking on self-preparation.

February 10 2014 at 3:28 PM Report abuse -2 rate up rate down Reply


February 10 2014 at 3:14 PM Report abuse rate up rate down Reply